```

[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]

[106th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:58514.wais]

 
 
     THE RUDMAN REPORT: SCIENCE AT ITS BEST, SECURITY AT ITS WORST

=======================================================================

                                HEARING

                               before the

                         COMMITTEE ON COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 22, 1999

                               __________

                           Serial No. 106-57

                               __________

            Printed for the use of the Committee on Commerce

                              

                    U.S. GOVERNMENT PRINTING OFFICE
58-514CC                    WASHINGTON : 1999

                         COMMITTEE ON COMMERCE

                     TOM BLILEY, Virginia, Chairman

W.J. ``BILLY'' TAUZIN, Louisiana     JOHN D. DINGELL, Michigan
MICHAEL G. OXLEY, Ohio               HENRY A. WAXMAN, California
MICHAEL BILIRAKIS, Florida           EDWARD J. MARKEY, Massachusetts
JOE BARTON, Texas                    RALPH M. HALL, Texas
FRED UPTON, Michigan                 RICK BOUCHER, Virginia
CLIFF STEARNS, Florida               EDOLPHUS TOWNS, New York
PAUL E. GILLMOR, Ohio                FRANK PALLONE, Jr., New Jersey
  Vice Chairman                      SHERROD BROWN, Ohio
JAMES C. GREENWOOD, Pennsylvania     BART GORDON, Tennessee
CHRISTOPHER COX, California          PETER DEUTSCH, Florida
NATHAN DEAL, Georgia                 BOBBY L. RUSH, Illinois
STEVE LARGENT, Oklahoma              ANNA G. ESHOO, California
RICHARD BURR, North Carolina         RON KLINK, Pennsylvania
BRIAN P. BILBRAY, California         BART STUPAK, Michigan
ED WHITFIELD, Kentucky               ELIOT L. ENGEL, New York
GREG GANSKE, Iowa                    THOMAS C. SAWYER, Ohio
CHARLIE NORWOOD, Georgia             ALBERT R. WYNN, Maryland
TOM A. COBURN, Oklahoma              GENE GREEN, Texas
RICK LAZIO, New York                 KAREN McCARTHY, Missouri
BARBARA CUBIN, Wyoming               TED STRICKLAND, Ohio
JAMES E. ROGAN, California           DIANA DeGETTE, Colorado
JOHN SHIMKUS, Illinois               THOMAS M. BARRETT, Wisconsin
HEATHER WILSON, New Mexico           BILL LUTHER, Minnesota
JOHN B. SHADEGG, Arizona             LOIS CAPPS, California
CHARLES W. ``CHIP'' PICKERING, 
Mississippi
VITO FOSSELLA, New York
ROY BLUNT, Missouri
ED BRYANT, Tennessee
ROBERT L. EHRLICH, Jr., Maryland

                   James E. Derderian, Chief of Staff

                   James D. Barnette, General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                  (ii)

                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Richardson, Hon. Bill, Secretary of Energy...................    11
    Rudman, Hon. Warren B., Chairman, President's Foreign 
      Intelligence Advisory Board................................    15
Material submitted for the record by:
    Dingell, Hon. John D., a Representative in Congress from the 
      State of Michigan, letter dated June 25, 1999, to Hon. 
      Warren B. Rudman, requesting responses for the record......    84
    Richardson, Hon. Bill, Secretary of Energy, responses for the 
      record.....................................................    78
    Rudman, Hon. Warren B., Chairman, President's Foreign 
      Intelligence Advisory Board, letter dated June 30, 1999, 
      enclosing response for the record..........................    87

                                 (iii)

     THE RUDMAN REPORT: SCIENCE AT ITS BEST, SECURITY AT ITS WORST

                              ----------                              

                         TUESDAY, JUNE 22, 1999

                          House of Representatives,
                                     Committee on Commerce,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 1 p.m., in room 
2123 Rayburn House Office Building, Hon. Tom Bliley (chairman) 
presiding.
    Members present: Representatives Bliley, Oxley, Barton, 
Upton, Stearns, Gillmor, Greenwood, Cox, Burr, Ganske, Rogan, 
Shimkus, Bryant, Ehrlich, Dingell, Markey, Rush, Klink, Stupak, 
Sawyer, Green, Barrett, and Luther.
    Staff present: Tom DiLenge, majority counsel; Mark 
Paoletta, majority counsel; Kevin Cook, professional staff 
member; Anthony Habib, legislative clerk; and Edith Holleman, 
minority counsel.
    Chairman Bliley. The committee will come to order: I want 
to thank the Secretary and I want to thank Senator Rudman for 
being available today. I know they have been testifying this 
morning over in the Senate. I also know that Senator Rudman has 
a schedule to meet and a plane to catch and we need to be 
respectful of that.
    As a result of that, I intend to make an opening statement 
and turn to our colleague, Ron Klink from Pennsylvania, for an 
opening statement and ask unanimous consent that all members 
may insert opening statements in the record so that we can get 
the testimony of the Secretary and the Senator Rudman and have 
as much time for questioning as possible.
    Without objection that will be the order. The Chair 
recognizes himself for an opening statement.
    Today, the full committee will hold this hearing on the 
report issued last week by the President's Foreign Intelligence 
Advisory Board--a report that speaks directly about the poor 
state of security at the Department of Energy's most sensitive 
nuclear weapons laboratories. The chairman of the board--the 
distinguished former United States Senator from New Hampshire, 
Warren Rudman--will testify before us today, along with Energy 
Secretary Bill Richardson, to discuss those findings and the 
board's recommendations for structural reform at the 
Department.
    Unfortunately for the American people, the Rudman Report 
confirms that the Department of Energy as currently organized, 
simply cannot be trusted with the awesome responsibility of 
protecting our Nation's most prized nuclear secrets. As I 
stated this past April at a subcommittee hearing on the topic, 
the Department's historical pattern on security matters is all 
too clear: scandal or incident, followed by announcements from 
well-meaning department heads of ``sweeping'' reforms that are 
either never implemented by the bureaucracy or soon abandoned 
once the public spotlight fades or priorities change. Given 
this troubling pattern, I asked the General Accounting Office 
last fall to begin a review of the Department's implementation 
of security recommendations and to update its work on the 
status of nuclear security.
    The Rudman Report describes this historical pattern in 
detail. Secretary Watkins, during the Bush administration, took 
aggressive steps to improve the Department's poor record on 
security--establishing a high-profile counterintelligence 
office with FBI involvement, instituting mandatory background 
checks on foreign visitors, and creating independent security 
policy making and inspection units for the first time in the 
Department's history. I understand that Secretary Watkins 
personally took an active interest in security matters, and 
that both he and his senior staff received regular security 
briefings.
    Yet, as the Rudman report found, just 2 years later, a new 
Energy Secretary came in and killed most of these initiatives. 
Counterintelligence was slashed and buried in the bureaucracy, 
background check waivers were granted to the labs' foreign 
visitors programs, the frustrated FBI officials packed their 
bags and left in disgust, and the Department's own security 
apparatus was shunted aside. No more secretarial or senior 
management briefings by the Department's independent security 
inspectors--they couldn't get time on the schedule. And 
numerous critical security reports and warnings from internal 
and external critics went unheeded.
    While the current Secretary is the first since Admiral 
Watkins to pay attention to security matters, there are 
troubling indications that he may be paying attention to the 
wrong people within the Department. Ever since the latest 
security scandal broke several months ago, Secretary Richardson 
has been busy reassuring Congress and the American people that 
whatever had been broken is now fixed. When our Oversight 
Subcommittee held a hearing in April to put these claims of 
success in historical perspective and to raise continuing 
security concerns, the Secretary attacked us for, ``wallowing 
in old problems,'' and, ``exhuming the past.''
    When the Cox report on Chinese espionage was released in 
May, Secretary Richardson dismissed its unanimous conclusion 
that security at the labs remained unsatisfactory, claiming 
that the report's 6-month-old findings were ``now outdated'' in 
light of his reforms. And when the Rudman report took direct 
issue with the Secretary's views on the current state of 
security, he accused the board of lacking evidence and relying 
on ``malcontents'' for information.
    The truth, Mr. Secretary, is that your repeated public 
claims that our nuclear secrets are now safe and secure are 
simply not accurate, and all the evidence you should have 
needed on that point was right within your own Department. I 
fear that you are not being well-served by your advisers, and 
that you are overlooking important sources of information. I 
find it difficult to understand that for someone who claims 
that security is his top priority, you had never met with--
indeed you apparently did not even know--your Department's 
chief security inspector until 2 days before he was scheduled 
to testify before our Oversight Subcommittee in May. And when 
my staff requested a briefing last week on the Department's May 
1999 security inspection of Lawrence Livermore National 
Laboratory--which I understand was not favorable in many 
important respects--your office blocked the briefing because 
you had not had a chance to be fully briefed on the subject 
yet.
    None of this bodes well for your reform efforts. As with 
all things, the devil is in the details of implementation. The 
Rudman Report makes clear that Congress cannot solely rely on 
the Secretary--any Secretary--to make the type of lasting and 
effective changes in security that this Nation deserves. That 
said, I think the specific recommendations of the President's 
Advisory Board need to be carefully considered to ensure that 
we don't trade in old problems just to find ourselves with new 
ones.
    I am particularly concerned with the board's apparent 
willingness to subordinate security policy and, more 
importantly, security oversight and inspections to what in 
essence would be a nuclear weapons program office. My 
experience in this area tells me that that would be a step 
backwards. I also have concerns about what would become of the 
independent environmental, health, and safety oversight that 
currently exists with respect to the Department of Defense and 
lab programs. But I agree with the board's view that the 
current management structure needs to be vastly simplified to 
ensure the most aggressive oversight and the highest standards 
of accountability--two things that have been sorely lacking for 
as long as the Department has been in existence.
    I look forward to today's debate and future debates, on all 
of these issues. I will now recognize the distinguished ranking 
member of the Subcommittee on Oversight and Investigations, the 
gentleman from Pennsylvania, Mr. Klink.
    Mr. Klink. Thank you very much, Mr. Chairman. To call this 
an important hearing I think would be an incredible 
understatement. I thank you for holding it and I thank you for 
yielding me this time for an opening statement. As you, Mr. 
Chairman, know and Mr. Dingell knows far better than I, this is 
an area in which this committee has a long and frustrating 
history of conducting oversight and recommending changes to 
environment, health, safety and security at these facilities.
    The Rudman report has spelled out in no uncertain terms the 
refusal of the weapons laboratories, to this very day, to make 
a full commitment to the security that equals the quality of 
their science.
    Whether this has resulted in espionage at a level that is 
inferred by the Cox report, we do not know. We do know that 
security needs to be radically changed. But I remain extremely 
skeptical of the report's recommendation to lift the nuclear 
weapons program and its contractors out from under the control 
of any Cabinet-level officers and plunge it down under another 
name and expect the culture to miraculously change. Also this 
proposal makes no provision for the safety, health, and 
environmental management responsibilities at the labs, nor does 
it deal with the major security problem: the nuclear materials 
accountability for those materials now stored in other sites.
    And, Mr. Chairman, I also am skeptical of the congressional 
proposals that would reward Defense Programs for its decades of 
arrogance by giving it a semiautonomous status in the 
Department of Energy, with even less control by anyone, 
including the Secretary of Energy, and no oversight structure 
of any type. This astounding provision is in the House defense 
authorization bill and is expected to be in the Senate's 
intelligence bill. This is something labs have wanted for at 
least 2 decades: a structure in which no one except their 
captive Federal bureaucracy can tell them what to do.
    One thing that we in this committee know better than almost 
anyone else is that the culture of arrogance which pervades the 
weapons laboratories is not just in the area of security but it 
is everything that the laboratories do. It is not only because 
of scientific accomplishment but also because of political 
clout. In many ways the laboratories, often with the help of 
the field offices, have control of the Office of Defense 
Programs, the Assistant Secretaries who have headed it, and 
occasionally even the Secretary.
    The Office of Defense Programs seems to view its job as 
getting to labs what they want. And we need to take some 
responsibility up here in Congress. The actions of the labs and 
the Defense Programs are often backed up by congressional 
members and delegation s in the States in which they are 
located. For these reasons, the labs have been able to thumb 
their noses at Congress and the DOE headquarters. Security, 
industrial and radiation safety, and responsibility for 
environmental management are viewed as major hindrances to 
their primary missions.
    Even now we must note that no one has been punished at 
either the Defense Programs or the University of California 
which runs Los Alamos, the lab on which the Chinese espionage 
investigation has focused. As far as we can tell, the only 
adverse action taken has been against the director of the 
Office of Standards and Security for an alleged security 
infraction unrelated to the espionage investigation, an action 
that has yet to be appropriately explained.
    The Office of Safeguards and Security is a policy office 
whose reports over the years pointed out numerous security 
concerns that angered the labs and Defense Programs. The 
unclassified version of those reports were cited six times in 
the Rudman report.
    Let me give you just a brief example in the safety area of 
how the labs' clout works. Just last week, staff was told that 
the Lawrence Livermore National Laboratory in 1998 killed the 
Department's press release concerning a large fine assessed for 
safety--for radiation safety violations. Because Congress has 
exempted the laboratories from actually paying the fines, the 
only real club that DOE has is bad publicity. The press release 
was dutifully prepared by a field office, was sent to the 
Secretary's office, and then disappeared. We are trying to find 
out what happened, but the Department is not being particularly 
forthcoming with staff of this information, and perhaps after 
this hearing we can get some assistance in finding out what 
happened to that press release.
    Let me give you another example of lab clout. For over a 
year Mr. Dingell, Mr. Brown, the ranking member of the Science 
Committee, and myself and others have been investigating the 
largest CRADA or Cooperative Research and Development Agreement 
ever signed. It is between the Sandia, Lawrence Livermore, 
Lawrence Berkeley labs and Intel Corporation, and it will 
continue to work to develop a critical piece of equipment for 
the next generation of computer chips. The labs got $250 
million. The only problem was that they and Intel want to 
manufacture all the equipment outside the U.S. Even though the 
technology was developed here. This meant that the lab 
researchers would have jobs but the high-paying skilled 
manufacturing jobs based on U.S. Technology would be located 
another country. That position was developed by the labs and 
the Oakland field office and was rubber-stamped by the Defense 
Programs. The headquarters staff hardly even knew the details 
of this enormous CRADA or that it violated our technology 
transfers law. At one point they intended to negotiate an 
agreement with a manufacturer in a single afternoon meeting. 
Only after great effort were Mr. Dingell and Mr. Brown able to 
convince DOE headquarters that American taxpayers had the right 
to get some actual benefit from the investment that they had 
made--or we think we convinced them.
    DOE signed a very general agreement with a foreign 
manufacturing company that is supposed to guarantee 
manufacturing in this country but so far has refused to produce 
a copy of the agreement. From the little we know, it appears 
not to be binding and we would like some help with the Energy 
Department to find out about that.
    Let me just say in full disclosure, Mr. Chairman, that the 
Secretary of Energy served with us on this committee, he is a 
friend of mine, someone I am sure is well-intentioned, and we 
will stipulate to that. But the question the Rudman report 
brings up time and time again is, what happens if the people 
within the Department of Energy don't listen to what the 
Secretary says, or even what the President says, or even what 
the Congress says. And what happens when Bill Richardson, our 
dear friend, the Secretary of Energy, is not the Secretary of 
Energy anymore? How do we know there is a continuation of 
policies which are to the best benefit of our Nation and to the 
taxpayer?
    For all of these reasons, I think that it would be a major 
error to give more independence and power, with no meaningful 
oversight, to the Nation's nuclear weapons laboratories.
    With that Mr. Chairman I yield back my time.
    Chairman Bliley. I thank the gentleman.
    [Additional statements submitted for the record follow:]
  Prepared Statement of Hon. Fred Upton, a Representative in Congress 
                       from the State of Michigan
    Thank you, Mr. Chairman, for holding this very important hearing 
today. I believe that the issues raised by the Rudman Report and the 
Department's long-standing inability to get its act together on 
security matters warrant the prompt attention of the entire Committee, 
and I applaud you for convening us so quickly to address this problem.
    As the new chairman of the Oversight Subcommittee, I have been very 
troubled by what I've learned over the past few months about both the 
history of security problems at the nuclear weapon labs and the current 
progress--or apparent lack thereof--that is being made in reforming 
this recalcitrant bureaucracy. I'm amazed by the Rudman Report's 
findings about continuing bureaucratic obstruction of Presidential and 
Secretarial reforms at the laboratory level. Secretary Richardson has 
boasted that he now runs the labs and they report to him, but the 
Rudman findings make me wonder who really is in charge here.
    I think it is also self-evident by now that the Department still 
has a long way to go before it can claim confidently that sufficient 
reforms are in place--and, most importantly, are working effectively--
to safeguard our nation's nuclear secrets. Just last month, the Cox 
Committee on Chinese espionage unanimously concluded that, even if all 
of the announced reforms are fully implemented, we cannot realistically 
expect that security will improve to a satisfactory level until next 
year at the earliest. Given the Department's history and the problems 
experienced so far in instituting the latest round of reforms, the Cox 
Report's conclusion appears well-founded.
    The Secretary's repeated public comments to the contrary are 
baffling. Either he is misleading the American public--which I don't 
believe he would intentionally do--or he has less information available 
to him than the Cox Committee and the Rudman panel had available to 
them, which itself is a major problem. Indeed, our Committee staff has 
been receiving briefings from various Department employees over the 
past several months that indicate continuing problems with security at 
the labs and the implementation of the Administration's announced 
reforms. Apparently, everyone except the Secretary knew of these 
continuing problems, forcing him to repeatedly backtrack in public 
about this unfolding scandal.
    The American people have a right not only to have their nation's 
most sensitive secrets fully protected, but also to get the most 
complete and accurate information about the status of that protection. 
I think, so far, the Secretary and the Department as a whole have 
failed in both respects. At the Subcommittee level, we plan to keep the 
pressure on the Department to live up to both of these reasonable 
expectations.
    Thank you, Mr. Chairman.
                                 ______
                                 
  Prepared Statement of Hon. Joe Barton, a Representative in Congress 
                        from the State of Texas
    Thank you, Mr. Chairman. I am glad you decided to hold this as a 
full Committee hearing, as this issue extends beyond just an Oversight 
and Investigations matter. Any legislative effort to reorganize the 
Department of Energy will have to come through the Commerce Committee, 
and it is essential that our Members understand the magnitude of the 
problem we are facing.
    Senator Rudman and his panel deserve a lot of credit for producing 
a candid and hard-hitting analysis of the security problem at DOE 
facilities. When the Rudman panel describes the Department of Energy as 
a ``dysfunctional'' structure characterized by ``organizational 
disarray, managerial neglect, and a culture of arrogance,'' it hit the 
nail right on the head. During my four years as the previous chairman 
of our Oversight and Investigations Subcommittee, and even dating back 
to my days as a Presidential Management Intern assigned to DOE, I have 
seen abundant evidence of the entrenched bureaucracy at DOE. Numerous 
Secretaries have tried to make changes at the Department, only to be 
outwitted, or out-waited, by those resistant to change.
    While Senator Rudman's panel did an outstanding job of 
characterizing the problem, I am not sure yet whether the proposed 
solution is the right fix for the problem. I believe it is necessary to 
relocate the functions of the labs completely out of DOE.
    From a security perspective, a more serious problem arises from the 
fact that a number of other DOE facilities not considered by the Rudman 
panel also engage in weapons-related work. Examples include the Oak 
Ridge National Lab, the Pacific Northwest Lab, and the Savannah River 
Site. Whatever solution we propose for the security problems at DOE 
must address the entire DOE complex, not just the handful of labs and 
plants that are most strongly identified with weapons work. Here is 
where the idea of a single security ``czar'' for the entire Department 
might be more effective at policing the whole organization than the 
more limited fix recommended in the Rudman report.
    There is one other area where I believe the Rudman panel may have 
missed the mark. All of my experience with DOE, both within the 
organization and here in Congress, tells me that the fundamental 
problem in the DOE organization is the dominant role that its 
contractors play. One cannot change the culture in DOE without 
addressing the role of these contractors. I believe that action should 
be taken where there is evidence of problems with the contractors.
    Any meaningful change in the DOE organization must start with the 
government personnel, but must follow through with how the DOE 
contractors execute the direction provided by the government. Certainly 
the government is responsible for defining the scope of work to be 
performed, negotiating a fair contract price, and then exercising 
sufficient contract oversight to ensure the work is performed. But the 
contractor is not off the hook in this equation. Two of the most 
problematic labs--Lawrence Livermore and Los Alamos--are run by the 
University of California. This contractor shares a large part of the 
responsibility for this problem. It may be expecting too much to ask an 
academic institution, whose philosophy is built around the free and 
open exchange of information, to operate effectively in the national 
security arena. I support terminating the University of California's 
contract because of their gross negligence in managing the Los Alamos 
lab where Chinese espionage on our nuclear weapons designs occurred.
    And that is where Secretary Richardson comes in. Mr. Secretary, you 
have a responsibility to set the right security standards for your 
organization. When those standards are not met, as clearly they were 
not in the Los Alamos case, you have a responsibility to hold the 
appropriate government officials and contractor personnel accountable. 
I am not talking about just the Wen Ho Lee incident, but rather about 
the mounting evidence that something is seriously wrong in the 
management of these labs and in the security operation throughout your 
organization. You should be thinking about replacing not just the 
responsible DOE personnel at the field level and headquarters, but also 
the responsible lab directors and contractors.
    Lastly, I think the Rudman report has it right regarding the 
limited ability of any one Secretary of Energy to change the system at 
DOE. No matter how well-intentioned Secretary Richardson may be about 
reforming the Department of Energy and correcting the security 
problems, there is no guarantee that subsequent Secretaries will bring 
the same priority to the job. And there is no guarantee that the 
existing bureaucracy of government personnel and contractor employees 
will implement your reforms, when they have resisted so many other 
reforms in the past. That is why this Committee must consider seriously 
the proposal to make a statutory change to the organization at DOE.
    Mr. Secretary, you have promised this Congress and the American 
public that the problems that surfaced at Los Alamos are under control 
and cannot happen again. The Rudman report says otherwise--that major 
security problems still persist in DOE. I hope we can all get past the 
natural instinct to defend the status quo and protect existing turf--we 
have to work together to do what's best for the country. This issue is 
too important to do anything less. Thank you, Mr. Chairman.
                                 ______
                                 
Prepared Statement of Hon. Cliff Stearns, a Representative in Congress 
                       from the State of Florida
    Mr. Speaker: After reviewing the Report of the President's Foreign 
Intelligence Advisory Board regarding the poor security at the 
Department of Energy Nuclear Weapons Laboratories and proposals for 
reform, I have come to the conclusion that I agree with Secretary 
Richardson's opposition to the recommendations of the Advisory Board to 
create a semi-autonomous agency or a separate independent agency and I 
agree with Secretary Richardson's opposition to a wholesale 
reorganization of the Department of Energy.
    The only way to effectively deal with the repeated and critically 
damaging security lapses is through the abolishment of the Department 
of Energy.
    I read with horror the Rudman Report and its notation that:
          ``Never have the members of the Special Investigative Panel 
        witnessed a bureaucratic culture so thoroughly saturated with 
        cynicism and disregard for authority. Never before has this 
        panel found such a cavalier attitude toward one of the most 
        serious responsibilities in the federal government--control of 
        the design information relating to nuclear weapons . . . Never 
        before has the panel found an agency with the bureaucratic 
        insolence to dispute, delay, and resist implementation of a 
        Presidential directive on security, as DOE's bureaucracy tried 
        to do to the Presidential Decision Directive No. 61 (issued) in 
        February 1998.''
    The Presidential Decision Directive (PDD) mandated new 
counterintelligence measures at the labs, but the Advisory Board found 
that implementation of PDD 61 suffered from ``bureaucratic foot-
dragging and even recalcitrance'' by DOE and lab officials.
    The report further notes that, ``DOE and the weapons laboratories 
have a deeply rooted culture of low regard for and, at times, hostility 
to security issues, which has continually frustrated the efforts of its 
internal and external critics.''
    I personally do not believe that a reorganization or a shake-up of 
the Department of Energy and how it handles nuclear secrets will be 
sufficient in destroying the pervasive anti-establishment culture that 
exists in the Department and at the weapons labs, as detailed by the 
Rudman Report.
    A cancer exists at DOE and the only way to rid the disease that is 
infecting our national security is through its removal of the 
Department's control of our nation's nuclear weapons. I believe the 
Department of Defense is much more capable of instituting the necessary 
security measures that will bring discipline to weapons management.
    The non-military civilian functions of DOE and the weapons labs 
could easily be rolled into a semi-autonomous agency within the 
Department of Commerce, such as NTIA.
    I admire my former colleague and still good friend, Secretary 
Richardson, for his diligent work of trying to correct the serious 
problems at DOE. But, the Rudman Report clearly details the 
uncorrectable culture that exists and has existed at DOE.
    Secretary Richardson, unfortunately, believes that the security 
problems that has led to overt espionage being committed against our 
nation has been fixed. The Rudman Report found new evidence of 
continuing problems despite the recent Presidential and Secretarial 
reforms, including poor control of restricted and classified data, 
inadequate monitoring of outgoing e-mails, and unsecure storage of 
nuclear weapons parts, to name a few of the ongoing problems.
    The Rudman Report concluded that DOE is ``incapable of reforming 
itself--bureaucratically and culturally--in a lasting way, even under 
an activist Secretary.''
    I want to compliment and thank Senator Rudman and the Advisory 
Board for their comprehensive work.
    They accomplished in 90 days what National Security Advisor Sandy 
Berger could not and did not even try to accomplish in three years. In 
fact, Notra Trulock, the former Chief of Intelligence for DOE and one 
of Secretary Richardson's intelligence advisors, has stated that he 
informed Mr. Berger in April of 1996 about the dilapidated security 
conditions at DOE.
    But Mr. Berger did less than nothing. He even waited over a year 
before notifying the President of the serious security problems. For 
nearly three years after Berger was notified and before Secretary 
Richardson came on board and before the Advisory Board was formed, 
nothing was done to correct these devastating problems at DOE.
    And now Secretary Richardson says lower-level employees will be 
fired, even though the National Security Advisor and other political 
appointees deserve immediate removal.
    The Department of Energy is a bureaucratic wasteland deserving of 
extermination.
    Thank you Mr. Chairman.
                                 ______
                                 
 Prepared Statement of Hon. Greg Ganske, a Representative in Congress 
                         from the State of Iowa
    A safe and secure Department of Energy, with its oversight over the 
most advanced computer and weapons technology in the world, is 
necessary for our national security. However, the General Accounting 
Office has been reporting security deficiencies at DOE laboratories for 
two decades.
    The Report of the President's Foreign Intelligence Advisory Board 
is important because it alleges that the Department has been 
indifferent to security, institutional authority, and personal 
accountability.
    GAO told us two months ago that the two main causes of DOE security 
problems were ``a long-standing lack of attention and/or priority given 
to security matters by DOE managers and its contractors'' and ``there 
is a serious lack of accountability among DOE and its contractors for 
their actions.''
    The Report before us today goes even further . . . ``Accountability 
at DOE has been spread so thinly and erratically that it is now almost 
impossible to find'' and ``Never before has this panel found such a 
cavalier attitude toward one of the most serious responsibilities of 
the federal government--control of the design information relating to 
nuclear weapons.''
    Even more troubling is the reported attitude that DOE employees 
approach their security responsibilities with ``cynicism and disregard 
for authority'' and that ``DOE is still unconvinced of Presidential 
authority.''
    In light of the Rudman Report's analysis, I think it is valuable to 
repeat some of GAO's findings:
    DOE Order 1240.2b requires that background checks be done for all 
foreign visitors from sensitive countries. In September 1997, GAO 
reported that at two of our nuclear laboratories, due to a special 
exemption to help those facilities cope with the high volume of foreign 
visitors, background checks were conducted on only 5 percent of 
visitors from sensitive countries. As a result of this failure to 
follow procedure, GAO was able to document 13 individual cases in which 
persons with suspected foreign intelligence connections were allowed 
access to DOE laboratories without background checks.
    Other reports detail foreign visitors allowed to roam secure areas 
after hours without supervision, a lab losing 10,000 classified 
documents, and a DOE security clearance database that was so outdated 
that 4,600 clearances should have been terminated.
    The Rudman Report asserts that we may now be physically secure 
against armed infiltration. Even if this assessment is accurate, we 
currently face an even more dangerous and harder to control threat--
electronic espionage. Computer hackers are very adept at circumventing 
firewalls and other protective devices. I would expect that we could 
construct a secure system.
    The Rudman Report recommends changes to the Department's structure. 
Something needs to be done to change not only the regulations of the 
Department, but also the institutional culture within which DOE 
employees perform their duties. I agree with the security changes 
recommended by the President's Foreign Intelligence Advisory Board. DOE 
remains accountable not only to the President, but also to this 
Congress and the American people.
    I would like to thank both Secretary Richardson and Senator Rudman 
for appearing here today. I look forward to your testimony and hope 
that you can help reassure this Committee that DOE is taking the 
necessary steps to ensure our national security.
                                 ______
                                 
    Prepared Statement of Hon. John D. Dingell, a Representative in 
                  Congress from the State of Michigan
    Mr. Chairman, thank you for holding this hearing today. No 
Congressional committee has spent more time and effort on oversight of 
the Department of Energy's security efforts. During my tenure as 
Chairman of the Subcommittee on Oversight and Investigations, we 
conducted dozens of hearings over a decade. We looked at numerous 
security lapses, such as the inability to account for nuclear material, 
the lack of security at our weapons facilities, theft of property, and 
problems in the security clearance process, the handling of classified 
information, and the foreign visitors program. Now the rest of the 
country knows why we were concerned.
    I have reviewed the report by Senator Rudman and the President's 
Foreign Intelligence Advisory Board, and I want to commend the Senator 
for an excellent report. It documents security lapses over the past 
several decades in a clear and comprehensive fashion. It is a wakeup 
call to the country that these problems are extremely serious and in 
need of correction.
    Reports alone will not suffice. Nor will good intentions. I note 
with interest that on Sunday, Senator Rudman stated that bureaucrats at 
the Department of Energy are still balking at implementing a 
Presidential order on security. He said, ``The attitude of people 
within that department, in that bureaucracy, is astounding.''
    To that I say, ``Amen.''
    The question before us is what to do next. In his report, Senator 
Rudman gave good marks to recent actions by Secretary Richardson. He 
stated that more reforms are necessary. More importantly, he noted that 
even if the Secretary made all of the appropriate reforms, we need a 
statutory restructuring, because a future Secretary could undo the 
reforms.
    Indeed, we have already seen reforms adopted by one Administration, 
such as an independent Office of Safeguards and Security Assessments, 
undone by the next Administration.
    Yet Chairman Bliley and I share concerns about current legislative 
efforts to establish an autonomous or semi-autonomous agency in charge 
of nuclear weapons for precisely the reasons described by the Senator. 
We are concerned that those same bureaucrats and lab contractors, who 
are refusing to accept the President's security order, would be the 
ones running this agency, with even less oversight than is currently in 
place.
    None of us wants to use these serious security problems as an 
excuse to put the inmates in charge of the asylum.
    This concern is not hypothetical. It is real. In every 
investigation concerning problems at the DOE weapons facilities and 
labs, the individuals responsible for the operation of defense programs 
and their contractors consistently and repeatedly denied the problems, 
punished the whistleblowers, and covered up the problems to their 
superiors and Congress.
    Unfortunately, two provisions that are currently before Congress--
one in the House-passed Defense Authorization, and the other a pending 
amendment to the Intelligence Authorization in the Senate--would give 
these recalcitrant bureaucrats and contractors total control over these 
programs. I strongly oppose these provisions. I was joined in my 
opposition to the House provision by Chairmen Bliley and Sensenbrenner, 
but we were not permitted to offer an amendment to strike it.
    I want to turn attention to an even greater problem. Senator 
Rudman's Panel's report is entitled, ``A Report on Security Problems at 
the U.S. Department of Energy.'' As a report on security problems, it 
is excellent. But in crafting legislative solutions to security 
problems, we must not create other problems. I refer specifically to 
safety, health, and the environment.
    Throughout the report, I found no references to the safety and 
environmental problems at the DOE facilities, and I understand why: 
that was not the panel's mandate. However, some of the legislative 
proposals would certainly affect those activities.
    I am taken aback by those who say, in effect, that we need to 
return to the days of the Atomic Energy Commission.
    Do they want to return to the days when the operators of the 
Hanford facility put thousands of gallons of highly radioactive waste 
in steel drums and buried them in the ground, and then for years tried 
to hide the environmental damage that is now costing the country 
billions of dollars a year to clean up their mess?
    Do they want to return to the days when safety was so bad at our 
weapons facilities that every plant had to be closed down, and we still 
do not have the capacity to produce tritium for our weapons?
    Do they want to return to the days when radiation experiments were 
conducted on human guinea pigs, and then were covered up for decades?
    The answer, of course, is ``no.'' I am pleased that the Rudman 
panel report appears to recognize the need for independent oversight 
for security and counterintelligence. I note that the recommendations 
also expect the independent oversight board to ``monitor performance 
and compliance to agency policies.'' In my view, health, safety and the 
environment must also be subject to oversight that is independent of 
national security officials.
    Mr. Chairman, I am sure that we will find that in the end, we are 
much more in agreement than disagreement. We all support the need to 
streamline the organizational structure and enhance accountability of 
agency officials. We all agree that independent oversight of sensitive 
areas, such as security, health, safety, and environment is required. 
We all agree that current proposals need to be significantly amended so 
that we do not repeat the problems of the past. We have in the past 
worked in a bipartisan manner to bring about reforms, such as the Cox-
Dicks amendment to the Defense Authorization and the establishment of a 
Defense Facilities Safety Board. That same effort is required now--not 
in a hasty and haphazard manner on the Defense or Intelligence 
Authorization bills--but in carefully crafted bipartisan legislation.
                                 ______
                                 
   Prepared Statement of Hon. Edward J. Markey, a Representative in 
                Congress from the State of Massachusetts
    Thank you, Mr. Chairman.
    The Rudman report justly accuses the Department of Energy's Defense 
Programs of a ``culture of arrogance,'' of ``organizational disarray,'' 
of being a ``dysfunctional bureaucracy.'' The report then proposes to 
isolate this dysfunctional culture into a separate government agency 
that will be even less subject to outside oversight. It does not 
address how to change the culture at the nuclear weapons labs or at the 
contractors who run them.
    The report traces many of the problems back more than 25 years. At 
that time, the weapons labs were under the Atomic Energy Commission, an 
independent agency. Because of the problems due to lack of oversight, 
the Commission was disbanded, with the labs transferred to the Energy 
Research and Development Administration, which later became part of the 
Department of Energy. Twelve years later, when the extent of 
environmental destruction hidden behind the walls of secrecy became 
widely known, the environmental cleanup and restoration functions were 
split off from the Defense Programs and an environmental czar was 
appointed. Ten years after that, when security problems became well-
publicized, a security czar was appointed. Throughout this time, the 
same contractor, the University of California, has actually managed Los 
Alamos as well as Lawrence Livermore Labs.
    Now we are being urged to reorganize the Department of Energy, to 
put defense programs back into a separate agency, to reanimate the 
corpse of the old Atomic Energy Commission. I fear this will take us 
back to the bad old days, when an agency focused on making bombs, 
hidden from public sight, caused environmental havoc and public health 
catastrophes. And once again the contractors who actually run the 
weapon labs go virtually unmentioned. Rearranging deck chairs on the 
Titanic will not plug the hole the security iceberg at Los Alamos has 
opened up. There is a gaping security hole in our weapons laboratories, 
but rearranging government offices will not close it.
                                 ______
                                 
  Prepared Statement of Hon. Gene Green, a Representative in Congress 
                        from the State of Texas
    Mr. Chairman, I would like to start by thanking you for holding 
this important hearing. The findings in this report deserve the close 
scrutiny that only this committee can provide.
    I would also like to thank our witnesses, Senator Rudman, and 
especially our former colleague and good friend, Secretary Richardson, 
for appearing before the Committee today.
    It was clear to me, even before this report came out, that there 
were serious problems with security at these DOE laboratories. Since 
the early 1970s, this committee has held extensive hearings on this 
subject, closely following the efforts of the DOE to institute reforms.
    Hopefully, this report, and the recommendations that it contains, 
will open a new chapter in our oversight of this problem. We need to 
move forward on solutions that will ensure the safety and security of 
both the information and technology that these labs produce and the 
personnel who work in these labs.
    However, I have my concerns about some of those recommendations. 
For instance, if a new, semiautonomous agency is created within DOE, or 
if we move the responsibility for these labs outside of DOE, what will 
happen to the many other tasks and functions that these labs serve that 
are not weapons-related?
    Also, it seems to me that part of the problem is the culture that 
has grown inside these labs over the years. If we streamline the chain 
of command or create a new agency, what will prevent that culture, that 
has contributed to the problem, from becoming established in this new 
entity?
    Furthermore, these weapons labs are currently self-regulating on 
things like radiation exposure, safety and environmental issues. Since 
these are the types of issues that have been problems in the past, will 
we continue to allow the labs to police themselves?
    Finally, we all know that these labs, for many years, ignored 
environmental concerns and focused simply on producing weapons. Who 
will be responsible for the environmental cleanup at these sites, 
especially if they are removed from DOE jurisdiction?
    These are just a few of the questions that I hope we have the 
opportunity to hear the answers to today, Mr. Chairman. I look forward 
to hearing the responses from both Senator Rudman and Secretary 
Richardson.

    Chairman Bliley. Mr. Secretary.

     STATEMENT OF HON. BILL RICHARDSON, SECRETARY OF ENERGY

    Mr. Richardson. Mr. Chairman, members of the committee, 
thank you for the opportunity to discuss how to improve 
security and counterintelligence at the Department of Energy. I 
want to thank the committee for its flexibility which allowed 
me to testify before the Senate this morning. I truly mean 
that, because I know how busy members of this committee are.
    No mission is more important to me than taking the actions 
necessary to ensure that America's nuclear secrets are well 
guarded. We have made considerable progress, but I won't admit 
perfection, as some of my colleagues have indicated. I am 
looking forward to working with this committee, the Congress, 
and Senator Rudman on ways to make things better.
    Let me deal with Senator Rudman's report. This is a very 
important report. It is hard-hitting, it identifies the root 
causes of the long-standing security and counterintelligence 
problems at the Department of Energy: confusing organizational 
structure, lack of accountability, unclear roles and 
responsibilities, a lack of attention to security.
    I want to thank the chairman, Chairman Rudman, and this 
panel for recognizing the aggressive steps we have already 
taken to address serious and systemic security problems at the 
Department's labs and for making additional recommendations 
that can help address the critical nature of the problems.
    Chairman Rudman identifies a list of attributes that must 
characterize meaningful reform. I agree virtually with all of 
them, such as the needs of leadership, clarity of mission, and 
streamlined field operations. The Presidential decision 
directive and the reforms I have undertaken are based on some 
of the same basic principles about what is needed to address 
the underlying problems. After several months of wrestling with 
the problems at the Department, I think it is essential that 
any reform of the departmental organization ensure that certain 
criteria are met.
    First we must ensure that there is a clear chain of command 
and accountability for implementing national security policy. I 
have already undertaken a major reorganization of the 
headquarters-to-field relationship which clarifies reporting 
lines and responsibilities across the complex. In my plan, the 
chain of command is clear, and accountability is established 
for the nuclear weapons program. The three weapons labs, and 
all of our nuclear weapons sites and facilities throughout the 
complex report to the Assistant Secretary for Defense Programs.
    On those charts, Mr. Chairman and members of the committee, 
are the reorganizations of the Department of Energy. The left 
chart is the way that I have organized the Department. The 
chart on the right is the confusing maze that I think has 
caused us these problems because of lack of attention given to 
security.
    Second, the second principle, we must raise and not lower 
the profile on authority of the nuclear weapons program to 
overcome the systemic and long-lived security problems 
identified by both the Cox and advisory board reports. From my 
experience, the Department needs more engagement from the 
Secretary of Energy and his or her office in the nuclear 
weapons program. I am concerned that fencing off the Nation's 
nuclear weapons program would blur the Cabinet Secretary's 
role.
    Third, we must ensure that security and counterintelligence 
programs have a senior departmental advocate with no conflicts 
of interest. The only way to assure this is to have a 
separation between the office responsible for the nuclear 
weapons program and the office responsible for establishing and 
monitoring security and counterintelligence policies. That is 
the only way that you can assure that security decisions aren't 
shortchanged and that they are not competing for the time and 
attention of senior management as well as budgetary resources.
    And fourth, we must ensure that stockpile stewardship 
doesn't lose its link to cutting-edge science. Our ability to 
ensure the safety and reliability of the nuclear deterrent 
depends upon cutting-edge science. An autonomous agency would 
partition the laboratory system and ultimately undermine the 
science on which our national security depends.
    A bureaucratic Berlin Wall between the weapons labs and the 
science labs would hamper the joint research that they perform 
and weaken the quality of basic science at the weapons labs. 
The nuclear weapons program depends on unclassified cutting-
edge science, requires active engagement in the other national 
labs, and contact with the international community. It needs 
overall scientific excellence to recruit and retain the best 
and brightest scientific minds for the weapons program.
    Let me just go through some reforms that we have taken. 
When I went through all the recommendations that Senator Rudman 
and his commission proposed, 43 in number, I found that my 
security plan embraces 38 of them. That is almost 90 percent. 
That is a lot of common ground in which we can work.
    Let me quickly run through some of the reforms that we have 
already put in place. In counterintelligence, in February 1998, 
President's Clinton ordered that the Department of Energy 
improve its security dramatically and implement an innovative, 
comprehensive counterintelligence and cybersecurity plan. By 
November of last year, I approved the far-reaching aggressive 
new plan, improving background checks on visitors, document 
controls, use of poly graphs, and increases in our 
counterintelligence budget which has grown by a factor of 15 
since 1996.
    In March we took additional steps for counterintelligence 
upgrades, security training, and threat awareness and focused 
an additional $8 million on further security, classified and 
unclassified computer network. When I was informed of the 
serious computer transfer issue at Los Alamos, I ordered a 
complete stand-down of the classified computer systems at our 
three weapons labs--Los Alamos, Livermore, and Sandia--to 
accelerate computer security measures already underway. The 
systems went back on line only when I was convinced significant 
progress had been made. As of today we have implemented 85 
percent of the key recommendations in our counterintelligence 
action plan.
    We deal with security. I know that this has been an issue 
of great interest to this committee, particularly Chairman 
Dingell, former Chairman Dingell. I came to the Department of 
Energy after having served 14 years on this committee, where I 
came to understand the magnitude of the security management 
problems facing the Department. And key members of this 
committee have held a few hearings on this subject. Important 
hearings.
    One of the first steps I undertook was to figure out how to 
untangle the maze of illogical reporting relationships between 
the labs, the field offices, and headquarters, to clarify chain 
of command and establish accountability. That reorganization 
was completed April 21 and you can see it on the left.
    Then on May 11 I took the next step needed to bring about 
accountability and put some teeth into the security operation, 
with the farthest-reaching security reorganization in the 
Department of Energy's history. We established the new high-
level Office of Security and Emergency Operation; the security 
czar, gathering all departmental security function s in one 
place and answering directly to me.
    Last Thursday, retired four-star General Gene Habiger 
accepted the position as the Department's security czar. 
General Habiger brings to this job his experience as the 
Commander in Chief of Strategic Command, where he was in charge 
of nuclear forces. He is only 1 of 9 CINCs, and there is 
probably nobody better to deal with nuclear weapons than 
General Habiger, who is here with me, and who has come out of 
retirement to take this position.
    As the security czar, the general will rebuild the entire 
Department's security, cybersecurity, and counterterrorism 
apparatus, as well as our emergency response operations. He 
will be the single focal point for security policy in ensuring 
that security is rigorously implemented across the Department 
complex. We all know that any organizational structure is only 
as its good as its people. We should all thank him for coming 
out of retirement to serve his country once more.
    These are some of the measures we have already undertaken. 
I believe that these changes embody the attributes that the 
Rudman Commission identifies as critical to meaningful reform, 
and have already had a dramatic impact on the security of the 
labs.
    But, clearly, more needs to be done. I am looking carefully 
at the recommendations in the Cox report and in this report of 
Senator Rudman. I have been meeting with Senators and Members 
of the House on ways to sort out what additional steps are 
needed and which of these changes are measures we should codify 
to ensure that the changes are institutionalized and last 
beyond the tenure of any one Secretary of Energy or committee 
chairman.
    There is much common ground. I think we can work that 
common ground to build on what has already been accomplished 
and make even more sweeping Department reforms than the 
advisory board recommends. But I do have concerns, I do have 
concerns about the creation of an autonomous or semi-autonomous 
entity, especially if we are trying to solve the security and 
counterintelligence problems at the Department.
    Security and counterintelligence problems cut across all of 
the Department's missions and are not limited to the weapons 
labs and productionsites. If anything, I think this has been 
the greatest contribution of this committee, to point out some 
of the problems that are in the entire complex, in the 
plutonium areas, at Rocky Flats, in other parts where the guns, 
bombs, some of the other parts of the Department have not been 
up to speed.
    Chairman Bliley. Mr. Secretary, could you----
    Mr. Richardson. Mr. Chairman, this is pretty important. I 
would appreciate the chance to be heard. We need to improve 
security at all sites, and fencing off the weapons complex is 
not the answer. Plutonium located at our environmental 
management sites demands the same level of security as 
plutonium at Los Alamos.
    Mr. Chairman, since I am the person that inconvenienced the 
committee, I will now wrap up. Let me just say that this 
Commerce Committee is one of the most active oversight 
committees in the Congress. And the last point I am going to 
make is that I think it is very important that there be 
independent oversight of my Department by an independent 
oversight agency reporting directly to me.
    This is something that was part of the Dingell Commission 
reforms that were adopted, but then previous Secretaries took 
out this office, put it in Germantown, Maryland, and I have 
brought this back because I think it is important to have this 
independent oversight.
    I believe that with the Rudman recommendations, with the 
Cox recommendations, we can make a lot of progress. I am trying 
to fix a problem. I have been in the job 8 months. We are not 
perfect but we have made dramatic reforms. I need the support 
of this committee to ensure that we have those reforms in 
place.
    Chairman Bliley. Thank you, Mr. Secretary.
    Senator Rudman.

   STATEMENT OF HON. WARREN B. RUDMAN, CHAIRMAN, PRESIDENT'S 
              FOREIGN INTELLIGENCE ADVISORY BOARD

    Mr. Rudman. Mr. Chairman, Mr. Dingell, first let me inquire 
of Mr. Chairman how long is that set for in opening statements, 
and I will try to stay within that time.
    Chairman Bliley. Well, since Mr. Secretary took about 10 
minutes, you plan on taking that amount, too.
    Mr. Rudman. All right. Let me try to do that. I will assume 
that members have at least read part of the report, if not all 
of it.
    First let me tell you it is an honor to appear here. It has 
been a long time since I have been up here again. It is nice to 
see so many familiar faces. There is rarely enough time to 
discuss a report such as this in detail, so I will try to 
highlight what we did.
    Our objective was to write a report that would stick, that 
would make a substantial difference, would help the President 
and the Congress and the Secretary effectuate reform, and that 
is essentially what we have produced. Let me point out to this 
committee that has had a long record of oversight over this 
agency, that we were not asked to look at management generally, 
we were not asked to look at other issues. Our charge at the 
present was quite narrow and direct: Look at security at these 
agencies, historically, present, future; make a recommendation; 
back it up with facts. That is what we have done. I cannot 
comment on other parts of this Department because we did not 
study them. And I must tell you I have never served on a 
committee in the Congress that had oversight directly over the 
Department of Energy, for which I express some degree of luck.
    I had our staff sit down and add up the number of reports 
that have found problems with security at DOE for the past 20 
years. There are 29 reports from GAO and 61 from inside DOE; 
more than a dozen reports from special task forces and various 
ad hoc panels. We wanted to cut through the fog of the 
bureaucratic jargon and somewhat wishy-washy language of some 
of those reports, so we have written a fairly direct and blunt 
report.
    I want to advise the committee that I did not do this 
alone. I had people familiar to this panel, certainly one of 
the preeminent nuclear physicists of this country, Sid Drell, 
who I am sure has appeared over here, who knows these 
laboratories better than anyone I have ever spoken to; Ann 
Caracristi, former number 2 at NSA, long-time government 
employee; Stephen Friedman, who, since his retirement from 
business, has done a lot of intelligence assignments for 
several administrations. So this is a group effort. And I have 
had a great staff, much of it loaned by agencies, some PFIAB 
staff.
    There is an old saying among farmers from New Hampshire, 
and probably Chairman Bliley would say it is Virginia, but we 
have all heard it, and the saying is, you know, if it ain't 
broke, don't fix it. Well, I have a corollary, and my corollary 
is if it is broken so badly as this is, don't even try to fix 
it, do something to kind of replace it. And that is about where 
we come out.
    It comes down to this: This is really not about security. 
That is what we finally decided. This is about what, frankly, 
former Chairman Dingell talked about in a series of reports 
written by him when he was chairman. This is about 
accountability. This is about a chain of command that works. 
And counterintelligence, security are merely symptoms of a 
problem of accountability.
    Let me say a word about the root causes. These laboratories 
are not only, in our opinion, the crown jewels of the United 
States scientific establishment, they are the crown jewels of 
the world's scientific establishment. Nothing we say in this 
report should be construed as criticism of the extraordinary 
contribution these laboratories have made to this Nation's 
security. In fact, we chose the title with some care, Science 
at Its Best, Security at Its Worst.
    And we don't have any comments about the work they do. We 
have a lot of comments about improving their security.
    We found evidence and heard testimony that was appalling, 
and I use that word deliberately. Now, you hold a lot of 
hearings here, and I held a lot of hearings over in my career 
at the Senate. It is fascinating what you can do in a closed 
hearing which you don't have the luxury to do that. It is as 
fascinating to invite people in who are not on the record, who 
are not subject to retribution by their agency, and have them 
tell you frankly what is going on. And what we heard was 
astounding. We can back up every allegation in this report with 
solid, uncontrovertible, confirmed fact.
    We found six areas, security and counterintelligence and 
management, and planning, physical security, personnel 
security, information security, nuclear materials accounting, 
and foreign visitors.
    The striking thing about this is--and this is known to this 
committee better than to us; I mean, after all, you have been 
doing this for years--there have been report and report after 
report that has come to the Congress, and I expect people have 
tried to do things. I don't quite understand why this 
bureaucracy seems to be able to defend itself against almost 
anything. I brought a few along for those of you that are 
lawyers. We often talk about the weight of the evidence; well, 
this is pretty heavy. There are a hundred of them. I brought 
six, just to remind you of some of the work that has been done 
mainly by DOE at your request and by the Senate committee's 
request, but more by this committee: 1986, DOE management of 
safeguards and security needs to be improved; 1988, GAO, major 
weaknesses in foreign visitor program at nuclear labs; 1993, 
done by DOE, lack of accountability for implementing security 
requirements; 1996, Defense Nuclear Facilities Safety Board, 
impediments to resolving problems as a result of lack of 
understanding, experience and personal involvement by upper 
echelons of DOE management; 1997, DOE Office of Security 
Affairs, fragmented and dysfunctional security management in 
place at DOE; 1999, DOE's bureaucratic complexity is so great 
that it can conceal otherwise obvious and easily detected 
flaws. The variety of relationships that exist between field 
offices, headquarters and contractors will continue as a root 
cause for complexity, confusion and lack of efficient, 
effective performance. And finally 1999, mandated by this 
Congress, the Chiles report, which you are all familiar with, I 
am sure, says a thorough revamping to institute streamlined, 
efficient management would send a strong signal throughout the 
complex that DOE takes its weapons programs seriously.
    Now, also this year in 1999, GAO, I believe at the request 
of this committee, ``In the final analysis security problems 
reflect the lack of accountability.''
    Now, I go through that not for dramatic effect, but to 
impress on this committee that this is not a security issue. 
This is not a counterintelligence issue. Those are only 
symptoms. This is totally dysfunctional unless you change it; 
no matter the caliber of the people that Bill Richardson brings 
in, it will happen again.
    Let me go through the remaining 8 or 10 pages without 
repeating myself. I believe that Congress and the President 
have an opportunity to do what no one has done before, and that 
is because of the environment in which this all takes place. I 
want to say to you that as a former Member of the Congress, I 
think you would all agree with me we are a lot like a fire 
department. We tend to respond to the latest fire. Had it not 
been for the New York Times breaking this story, had it not 
been for Chris Cox and Norm Dicks and the excellent work that 
they did, I daresay that the President would probably not have 
asked PFIAB to do this. I wouldn't be here today, and business 
would go on as usual.
    That is a troubling thing to me. It shouldn't take the 
press to galvanize our own institutional responsibilities. And 
I use the word ``our'' because I still in my way feel as an 
alumni of this great legislative institution called the U.S. 
Congress.
    You certainly have enough evidence here. I don't 
understand. Maybe Chairman Dingell, Chairman Bliley will 
understand why something didn't happen before. Maybe people 
tried. But we found evidence of this bureaucracy managing to 
fight off every major reform that was tried until the man on 
the left, and I have high regard for what he has done, and I 
want to put that on the record.
    Now, let me first talk about the models. We have just come 
from 3 hours over at the Senate, and we are able to disagree 
without being disagreeable. Why we recommend a semiautonomous 
agency is no accident. This was nothing that we came up with 
just suddenly a flash of lightning. We looked at agencies that 
had very interesting scientific and technical responsibilities 
contained within larger departments that had dissimilar 
functions, and we found four, and they work. The National 
Security Agency is part of DOD, yet the Secretary of defense 
has total responsibility and authority to run that agency. 
Defense Advanced Research Projects Agency, DARPA, huge, does 
extraordinary scientific work, part of the Department of 
Defense, but a separate agency; NOAA, part of the Department of 
Commerce, responsible to the Secretary; and finally the NRO, 
which we can't talk about much in unclassified session, but 
which does extraordinary work, very similar in some ways in 
terms of contracting and research, but with a totally different 
management structure and none of the problems that we have seen 
here. That is why we made this recommendation.
    Let me say one other thing and just put this prepared text 
totally aside because I want to wind up in time. A question has 
been raised by former Chairman Dingell in a letter that was 
written to this committee in response to the Kyl-Domenici 
proposal. That letter was written before our proposal ever was 
published by a matter of weeks. One of the things that Dr. 
Drell pointed out to us--and if you look at our organizational 
chart--was a very strong point made by several people here, and 
I want to just assure you of what we are doing. You can't 
separate science of the Department of Energy from these labs. 
They do biological research, they do mathematic research, they 
do computer research, many other things. So we maintain a 
strong link. That is why although you will find in our report 
there are two models we give you, one like NASA, which take it 
separately, pull it out of DOE, make it directly accountable to 
the President, or make it a separate agency, or, if you will, 
administration, directly responsible to the Secretary, but 
still within DOE.
    We opt, I opt, for the second one because of the incredible 
science that is done, and you ought not to separate that. But 
what you have now is a dysfunctional bureaucracy. And what we 
have put together is what we have modeled after those 
bureaucracies within this government that work.
    Finally, the most incredible thing that we came across was 
this IDA, Institute for Defense Analysis, report, which this 
Congress authorized, this Congress appropriated money for. This 
is a superb report. It mirrors much of what we have said, and 
yet it appeared to go in some dust bin. And I would just say to 
you, Mr. Chairman, that there is not much disagreement between 
the Secretary and myself except he continues to say, I don't 
want a semiautonomous agency. And I said to him privately and 
publicly I don't really understand that. The language we 
recommend in this semiautonomous agency is, notwithstanding any 
other provision of this law or act, the Director of the Agency 
for Nuclear Stewardship, who also serves as an under Secretary 
of Energy, shall report directly to and be responsible directly 
to the Secretary of Energy, which shall be the Director's 
immediate superior. That is not our language. That is the 
language from the existing agencies around this government.
    So, Mr. Chairman, I will stop right there.
    [The prepared statement of Hon. Warren B. Rudman follows:]
Prepared Statement of Hon. Warren Rudman, Chairman, President's Foreign 
                      Intelligence Advisory Board
    Distinguished members of the House Commerce Committee. Let me first 
say thank you for the invitation to appear here today.
    I know there is rarely enough time to discuss all the issues that 
are raised in a report such as this, so I would like to make just a few 
introductory comments, give you a brief synopsis of the PFIAB panel's 
report, and then move straight on to the questions and answers.
Introduction
    Let me say first that we had one major objective with this report. 
There is nothing more important to America's long-term national 
security interests than security of our nuclear secrets. And that 
security has been atrocious for a long time. But report after report 
has been tossed up on the shelf to gather dust. So our objective was to 
write a report that would stick, that would actually make a substantial 
difference in the way that security at the labs is handled.
    I had our staff sit down and add up the number of reports that have 
found problems with security at DOE for the past 20 years. The numbers 
are astounding.

29 reports from the General Accounting Office;
61 internal DOE reports; and,
More than a dozen reports from special task forces and ad hoc panels.
    Altogether that is more than 100 reports, or an average of 5 
critical reports a year for the past two decades. And here we are, 20 
years down the road, still battling with the same issues. That's 
unacceptable.
    Even more unacceptable to our panel would be adding this report to 
that list of more than 100 reports.
    We wanted to cut through the fog of the bureaucratic jargon and 
wishy-washy language that has worked to protect the status quo over the 
years.
    So our objective was to take the major security issues one-by-one, 
and address them directly and forcefully. We did that. And I want to 
commend my colleagues--Ann Caracristi, Stephen Friedman, and Dr. Sidney 
Drell--for working with me to do that. This was not an easy report to 
put together. But they, and the members of the PFIAB staff and adjunct 
staff, put in long hours to get it right, to make sure it was rock-
solid on the facts, and to get it done on time. And I think they did an 
extraordinary job.
    That is also why I think President Clinton also deserves a great 
deal of credit. We had some very tough words for the Administration in 
this report. But he agreed to release it to the public--something that 
has never been done in the history of the PFIAB--and put this issue on 
the table. And I must say that when we briefed him, he was very 
appreciative of the work that we had done, because he recognizes how 
important it is.
Restoring Accountability
    There's an old saying among New Hampshire farmers. They say: ``If 
it ain't broke, don't fix it. I have a corollary: ``If it's badly 
broken, don't fix it--replace it!''
    This report finds that the Department of Energy is badly broken. 
And it is long past time for half-measures and patchwork solutions. It 
is time to fundamentally restructure the management of the nuclear 
weapons labs and establish a system that holds people accountable.
    That's what it comes down to. It's not just about security. If 
you've ever been to one of these labs, you know they put up one heck of 
a fence. And it's not just about counterintelligence. It's about 
whether we are going to have a system of management that holds each and 
every person responsible for the security of these labs.
    No President or Energy Secretary or Committee Chairman can 
guarantee that the laws on the books are going to provide absolute 
security. But when management of these labs is on our watch, we can and 
should demand absolute accountability. So that's what our report has 
proposed: alternatives that we think will help the leadership impress 
the seriousness of this responsibility on the people within the 
organization.
Background and Root Causes
    Let me say a word about what we found.
    We found that these labs are not only the crown jewels of the U.S. 
scientific establishment. They are the crown jewels of the world 
scientific establishment.
    We visited several of the labs, and I can tell you that their work 
is truly phenomenal. And I want to be clear that nothing we say in this 
report is intended as criticism of the scientific research and 
development at the labs. Nor do we want to do anything to undermine 
their effectiveness. We want to improve their security, their 
counterintelligence, and the accountability that allows them to 
continue to do their job.
    We found that maintaining security and strong counterintelligence 
at the weapons labs, even under ideal circumstances, is challenging. 
Part of the difficulty comes from the inherent character of the work at 
the weapons labs:

 an international enterprise;
 requiring collaboration across bureaucratic lines;
 involving public/private cooperation;
 amid a culture of scientific research.
    The inherent problems have been made worse over the years because 
the weapons labs have been incorporated within a huge bureaucracy that 
has not made security a priority. The Department has been distracted by 
other national imperatives, such as the cleanup of radioactive waste 
and DOE's role in the national drive for clean and efficient energy, 
etc.
Recurring Problems
    We found evidence and heard testimony that was appalling in six 
critical areas: security management and planning; physical security; 
personnel security; information security; nuclear materials accounting; 
and foreign visitors (counterintelligence).
    There has been report after report of serious security failings; 
here are but a few examples . . . 
    We found recent cases of:

 Foreign scientists visiting labs without proper background 
        checks and monitoring.
 Classified computer systems and networks with innumerable 
        vulnerabilities.
 Top-level bureaucrats who could not say exactly to whom they 
        were accountable.
 Instances where secure areas were left unsecure for years.
 Thousands of employees being granted security clearances 
        without good reason.
 In the middle of all this, there were confirmed cases of 
        espionage, the damage from which we may never know.
    And as you can see from the chart that shows how long it took to 
fix even the very basic security problems, some of the evidence that we 
found simply boggles the mind.
    How can it be that it took less than three years to construct the 
first weapons labs and build an atomic bomb, but in our time it takes 
nearly four years for someone to fix the lock on a door protecting 
nuclear secrets?
Responses and Responsibilities
    There is not a person in this room--and I would add there's 
probably not a person in the Department of Energy--who, when confronted 
with that kind of record would say that this is tolerable. It is not. 
It is intolerable. In fact, it is a disgrace to the nation.
    If that is the case, then why have these things been allowed to go 
on, year after year? DOE has had so many overlapping and competing 
lines of authority that people are rarely held accountable for 
failures. Just to give you an example, I want you take a look at a 
chart that I brought.
    A couple of years ago, the Defense Department made an honest 
attempt to track the chain of responsibility for protection of the 
nuclear-related operations at the Department of Energy. This is what 
they came up with.
    If anyone in this room can make sense out of this management 
structure you ought to be a brain surgeon instead of a Member of 
Congress.
    Let me be clear: there is plenty of blame to go around. No 
administration can claim it gave this problem sufficient attention, let 
alone took the proper steps to solve it.
    Several Secretaries have tried some type of reform at one time or 
another. And there were attempts to try to improve management 
effectiveness and accountability--but within the confines of the DOE 
bureaucracy. The problem is that the DOE bureaucrats and lab employees 
have been able to wait out the reform initiatives and then revert to 
form.
    Because of the overwhelming weight of damning evidence of security 
failures, and the profound responsibility that comes with the 
stewardship of nuclear weapons technology, it is time to fundamentally 
restructure the lines of authority so that the weapons labs and their 
security are ``Job Number One'' within a substantially autonomous 
agency.
    Even in the current uproar over the Cox Committee report (and 
related events), PFIAB found as late as last week indifference and 
``business as usual'' at some levels at the labs. For example, there 
has been incomplete implementation of computer security measures and 
foot-dragging on implementation of a good polygraph program.
    Just yesterday, there were reports of ``strong opposition'' to the 
use of polygraphs at the weapons laboratories.
    If the current scandal, plus the best efforts of Bill Richardson 
are not enough, only a fundamental and lasting restructuring will be 
sufficient
Looking Ahead
    The Congress and the President have an opportunity to do what none 
of their predecessors have done: step up to the plate and make a 
lasting reform through a fundamental restructuring of DOE
    PFIAB offers two alternatives that will make accountability clear 
and streamline reporting channels: A semi-autonomous agency; and, A 
completely independent agency.
    I would like to note, parenthetically, that we call for the 
integration of the DOE Office of Naval Reactors into the new Agency for 
Nuclear Stewardship. We recommend this because we believe that the ANS 
should be the repository for all defense-related activities in the DOE. 
However, we believe the Office of Naval Reactors must retain its 
current structure and legal authority under which its director is a 
dual-hatted official of both DOD and DOE.
    Our panel debated the merits and demerits of these reorganization 
proposals. But we came down in full agreement on one principle and from 
that principle we will not deviate: the nuclear weapons labs need to be 
semi-autonomous from the Department of Energy as a whole, and that 
change needs to be substantial and codified.
    It is not enough to change policy from the top, we have to change 
the culture, priorities, and implementation at the ground level.
    That will require very strong leadership plus an organization that 
allows people to be held fully and directly accountable for their 
actions.
Response to Hint about Cooperation
    Someone asked me if it was merely a coincidence that the PFIAB 
panel's recommendations for a semi-autonomous agency were similar to 
those proposed by some in Congress.
    Foremost, I will state unequivocally and for the record that there 
was no collaboration with the Congress on our findings or our 
recommendations.
    Second, I would remind people that we did not endorse a single 
solution, although I would have much preferred to do so. We sketched 
two alternatives and, as a panel, purposely did not favor one over the 
other.
    Finally, none of the conclusions that we reached or alternatives 
that we considered are new. After looking at the 100 or so of these 
critical reports, the fact that we reached similar conclusions was not 
a matter of coincidence. It was destiny.
    Just look at the record.
    In 1976, federal officials studied the operation of the weapons 
labs and considered three possible solutions: placing the weapons labs 
under the Department of Defense, making them a freestanding agency, or 
leaving them within the Energy Research and Development Administration. 
They opted for the status quo.
    In 1979, an internal management audit of DOE found that its top 
management was poorly organized, its planning was spotty, and its field 
structure was not integrated into headquarters staff. When asked who 
was in charge of the field offices, the Secretary of Energy at the time 
said he would have to consult an organizational chart. One employee 
said that DOE was ``about as well organized as the Titanic was in its 
11th hour.'' But again, the status quo prevailed.
    In 1981, the incoming Reagan Administration, led by OMB, evaluated 
whether to dismantle the Department of Energy and place its nuclear 
operations with an independent agency. The idea was dead in less than a 
year.
    In 1985, the Reagan Administration appointed a blue-ribbon panel 
appointed to study DOE's security and organization problems. Again, 
Congress and federal officials weighed whether the weapons labs should 
be transferred to the Department of Defense or DOE should be 
restructured to be given more autonomy to the labs. The status quo 
prevailed.
    In 1995, the Galvin report said that it was ``hard to reach any 
other conclusion than that the current system of governances of these 
laboratories is broken and should be replaced with a bold 
alternative.'' That report recommended ``an alternative structure . . . 
that achieves greater independence.'' But the status quo prevailed.
    In 1997, the Institute for Defense Analysis issued a very detailed 
report.
    This was a report that was proposed by Congress. You authorized it. 
And you paid for it. You must have paid a lot of money for it, because 
it was very thorough. Its conclusions were very clear and very similar 
to those of our panel. Nothing happened.
    Every time a President or Energy Secretary or Congress has run up 
against the DOE bureaucrats, the bureaucrats have won. They are fully 
aware of that fact. And if you let them, they will win again in the 
future.
    It reminds me of what a current DOE official told our panel just a 
few weeks ago. He said that the attitude of the people deep inside the 
bureaucracy is ``WE-BE.'' Their attitude toward the leadership is ``WE 
BE here when you came, and WE BE here when you're gone. So we don't 
have to take you seriously.''
    That is arrogance. That is the type of arrogance that enables DOE 
bureaucrats to ignore a direct order from the highest authority in the 
Executive Branch. In other words, their response to a direct order from 
the President of the United States was not ``Yes, sir'' or even 
``Yes.'' It was ``maybe.''
    I have yet to meet a general who believed he could win a war with 
soldiers who will not obey orders and are never punished for failure to 
do their duty. That is what we have in DOE. This is not a security or 
counterintelligence problem. It is an accountability problem.
Secretary Richardson
    I think it would be useful at this point to say a word about 
Secretary Richardson's recent initiatives.
    I have a high regard for Secretary Richardson and I think that he 
has been working very hard to carry out his duty--as he perceives it--
to address these problems. I would also like to commend the Secretary 
for bringing both Ed Curran and General Habiger in to address the 
problems at the labs. Both have impeccable credentials and a no-
nonsense approach to getting things done.
    But as good as Ed Curran and General Habiger are, they cannot make 
up for the culture of arrogance, the pervasive disregard for security 
and counterintelligence issues, and the lack of accountability in the 
Department.
    The problem, as we see it, is that Secretary Richardson will be 
gone in 18 months, and it is not clear that these two very capable men, 
under a new secretary, will be allowed to remain indefinitely.
    Most of the events that precipitated this current uproar occurred 
before Secretary Richardson arrived on the scene in 1998. Because he 
has been at the tip of this sword, he has been sensitized to these 
security problems and has worked very hard at them.
    But one thing is certain: the next Secretary will have different 
priorities and be pulled in a different direction by other emergencies.
    Secretary Watkins, for example, had excellent credentials on 
security issues. But when he became Energy Secretary he was immediately 
besieged by the public outcry over the handling of environmental 
issues. Congress also diverted its attention to address these issues--
and rightly so.
    Unfortunately, the reality is that the American body politic works 
like a fire department. It responds to the latest fires.
    That is why Congress and the President must institutionalize these 
changes in the Department of Energy by embedding them in the statutes 
and implementing them at every level.
    Regardless of whatever issue is occupying the Congress or the 
Executive Branch, the people in charge of security and 
counterintelligence at the nuclear weapons labs need to have the tools 
and the structure that allow them to do their jobs.
    The fundamental issue of accountability and how well it is 
instilled in the attitudes and actions of individuals within the labs 
is going to remain regardless of which President, which Energy 
Secretary, or which Congress is in office at any one time.
Conclusion
    So I hope that you, in this Congress, and the President can work 
together on this. Nothing about this is politically easy. Jobs are at 
stake. And it is hard for people who have so much vested in the 
existing system to admit that it simply does not work. But I do hope 
that the Congress and the President can reach an accord. This is a 
matter of tremendous gravity for our national security. And I think 
everyone here will agree that it should be above partisan politics.
    I also believe that solving these security and counterintelligence 
problems within DOE will ultimately help the Department to better 
address its many other missions.
    I want to commend Congressman John Dingell, in particular, for his 
steadfast efforts over the past two decades to try to remedy so many of 
the problems at DOE. Our panel agrees with the Congressman that the 
pervasive lack of accountability undermines not just security and 
counterintelligence, but the work of the Department in many areas.
    For example, the Congress, in restructuring DOE, should also look 
at the contractual relationships and evidence that the contractors have 
impeded and resisted federally mandated reforms.
    Thank you again for inviting me to come up here. And I will be more 
than happy to take any questions you have.

    Chairman Bliley. Thank you, Senator.
    The Chair will recognize each member for 5 minutes for 
questions. I would ask that we not ask for extension of time 
because, as I said at the outset of this hearing, that Senator 
Rudman has a tight schedule, and we want to get everybody a 
chance to ask their questions.
    Chair recognizes himself for 5 minutes.
    Mr. Secretary, according to press accounts, the November 
1998 intelligence report provided to you and other top 
administration officials noted that 37 Chinese intelligence 
officers had visited or been assigned to the labs or other 
Department sites over the last 5 years. GAO testified before 
our oversight subcommittee in April that often the Department 
knew its foreign visitors were spies, but felt that they could 
adequately monitor their access to sensitive materials or had 
other defensive mechanisms in place.
    You say that you are now doing 100 percent background 
checks on foreign visitors to the labs, but given the history 
here, I am not sure whether that means scientists whose 
backgrounds suggest ties to intelligence agencies will actually 
be barred from the labs or whether they will be permitted 
anyway on the theory that they can be adequately monitored.
    What exactly is the Department's policy on foreign visitors 
with suspicious backgrounds, and will you commit to us today 
that no known or suspected intelligence officers from sensitive 
countries will ever again be permitted to have any contact with 
their labs or their employees?
    Mr. Richardson. Mr. Chairman, I can commit that to you. I 
can assure you that we have the best counterintelligence person 
in the government in Ed Curran, who has had 37 years experience 
in the espionage cases. We now have at this very moment 100 
percent capability to do background checks on scientists from 
sensitive countries. That is a list includes Russia, China, 
India, Pakistan, several others. We think our foreign visitors 
program--it has been tightly controlled. We are monitoring it 
closely. We have individuals from the lab accompany some of 
these scientists to classified areas.
    We have rejected potential visitors who raised suspicions, 
a criteria that is important as these scientists have ties to 
intelligence agencies. As I said, we have rejected groups and 
people, and it is working well. And Mr. Curran can provide 
further details if you so choose.
    Chairman Bliley. Thank you, Mr. Secretary.
    Mr. Secretary, I have some questions about your proposal 
for a new security czar to coordinate the disparate security 
functions of the Department. I have seen reported that the czar 
would have control over the now cross-cutting 800 million 
security budget, which I believe would be essential to 
effective reform. But I note that in the Department's recent 
press release announcing the hiring of the czar, there is no 
mention of whether he will, in fact, have this power which now 
resides with each Assistant Secretary and lab director.
    What are your plans in this regard? Will the czar have 
total budget control and authority to order and pay for 
security upgrades, or will the labs and the Assistant Secretary 
still be able to block reforms?
    Mr. Richardson. I created a czar, Mr. Chairman, to 
precisely ensure that security is given a higher priority than 
it was before. And it certainly was not given a higher priority 
before. General Habiger for the first time--all the security 
budgets will be formed separately from the rest of the program 
budgets. And we are talking about $800 million.
    What we talk about in cross-cutting budgets is General 
Habiger will work with all the relevant Assistant Secretaries 
throughout the whole complex and make sure that security is 
given a budget, that it is properly administered, that it is 
handled, that it is not siphoned off. In the past what you saw 
was security budgets siphoned off the programs. If you are a 
program director, you spend it on your program and not 
security.
    Chairman Bliley. Well, who is going to have the final say 
if he says, I need this security at Lawrence Livermore, and the 
lab director says, well, we think that is too much, we don't 
think you need that, and I am the Assistant Secretary?
    Mr. Richardson. The security czar will have the ultimate 
say because he will have my backing, and he will determine the 
security budgets.
    Chairman Bliley. All right. Well, thank you very much.
    Senator, your report is quite candid, and I commend you for 
it. I know that before it was issued, you briefed the President 
and other White House officials on your findings and 
recommendations. What was the White House reaction, and did 
anyone over there indicate to you whether the President was 
prepared to accept your reform recommendations?
    Mr. Rudman. Mr. Chairman, it was a strange event. This was 
not to be released until last Thursday. I got a call in New 
Hampshire on Sunday the President wanted to be briefed on it 
Monday morning last. So I flew back here, got the staff to get 
it together, got it printed overnight, and saw him at 9 in the 
morning. He had a call coming from Mr. Yeltsin following that. 
So we finished our briefing. He thanked us, told me he 
appreciate what we have done, would read it very carefully, and 
the phone rang. So I have no idea what he thinks about it.
    Chairman Bliley. Thank you. I see my time has expired.
    Now, I would like to recognize the gentleman from Michigan, 
the ranking member, Mr. John Dingell.
    Mr. Dingell. Mr. Chairman, I thank you. Mr. Chairman, I ask 
unanimous consent my opening statement be inserted in the 
record.
    Chairman Bliley. Without objection all opening statements 
will be inserted in the record.
    Mr. Dingell. Mr. Chairman, I wish that 5 minutes were 
enough to express the high regard that I have for Senator 
Rudman and to welcome him back, and also to welcome our old 
friend, a former member of this committee, the Secretary.
    Senator, the laboratory directors at Los Alamos and 
Lawrence Livermore labs are employees of the University of 
California, not the Department of Energy. The lab directors 
have day-do-day responsibility for security and computers, 
physical security, other types of security. The government 
basically employs the University of California as a contractor 
to manage employees and lab facilities.
    You talked in your report of the culture of the defense 
laboratories, regarding it as arrogant, fractious, saturated 
with cynicism and disregard for authority. You stated that to 
this day the laboratories are fighting security changes. You--
shouldn't we fire a contractor who behaves this way?
    Mr. Rudman. This was not within the ambit of our charge, 
but I am never one to avoid a direct question, Congressman 
Dingell, so I will answer you. I think that the Secretary ought 
to look real hard at every contractor that deals with DOE.
    Now, let me say from a scientific point of view you cannot 
beat what they have done so far. I think they are 
extraordinary.
    Mr. Dingell. But they provided a good bit of it to the 
Chinese.
    Mr. Rudman. I did not have that in mind, but of course you 
are correct. But I would make the observation that certainly 
the Secretary is going to have to look at all its contractors, 
which, if I am correct, the Secretary's predecessor fired a 
contractor at Brookhaven for misdeeds and replaced that 
contractor. I think you have got to be very careful changing 
contractors. These people do very good work.
    As you know, I am not from California, Mr. Dingell, I am 
from New Hampshire, so I have no constituent interest. But it 
seems to me that they not only have to do good science, but 
they have to do good security.
    Let me tell you something that may surprise the Secretary. 
I was going to tell him this right after the hearing this 
morning, but he left and headed over here, and I just missed 
him. I read a report last evening, we have good sources at 
PFIAB, from an employee at one of these laboratories who 
thought that the idea of computer security training today was 
nothing but--to use a polite word--hogwash, and he would not 
attend.
    Now, let me just say that there better be some discipline 
in this process or--it is one thing to lay down rules; it is 
something else to get these people to obey these rules, which 
is one of the reasons we want to see this thing carved out a 
bit.
    Mr. Dingell. Well, I would like to do a little carving on 
my own, but it would probably take place on the persons of some 
of the people who have been violating security.
    Mr. Secretary, why don't we fire these contractors if they 
behave the way the Senator and his commission say? Why do we 
keep people on who are security risks and who are arrogant, 
haughty and resist change?
    Mr. Richardson. Congressman, I have set a new policy with 
contractors. In most every case since I have been on board, we 
have recompeted contracts. We think that this is a good use of 
taxpayer money. This is in line with what the Congress wants to 
do and gets us a better bang for the buck. I will reassess--I 
personally get involved in look looking at every contract. I 
will look at the lab contract. I will say that we have had 
dramatic improvement in the attitude of the lab employees in 
terms of observing security procedures.
    What Senator Rudman mentioned is that I ordered a stand-
down the last 2 days after reading the Rudman report. A stand-
down at the nuclear weapons labs is--basically I shut them all 
down for 3 days--2 days, so that we look at all security, 
cybersecurity, computers and see where we are.
    Now, I would wish you would tell me about this employee. I 
will say one more thing.
    Mr. Dingell. My time is limited, Mr. Secretary, and I do 
this with all respect. We have talked about a semiautonomous or 
independent or semi-independent agency. Frankly, we have seen 
this kind of structure. It is call the Atomic Energy 
Commission. It didn't work. It had no accountability. Every 
place it dealt with is now a cesspool of contamination, atomic 
and otherwise. It dripped abuses, and it was run not by the 
U.S. Government, but by the contractors.
    How is it we can expect a semiautonomous agency to behave 
any better than the AEC did in times past?
    Mr. Rudman. Fair question, Mr. Dingell. Let me simply say 
that that is why we think it should not be--even though we gave 
the Congress two independent kinds of looks at it, one totally 
autonomous, like NASA--we looked back at the AEC experience, 
the folding in of all these agencies, we believe it needs 
Cabinet-level supervision. That is why we believe it ought to 
be within the DOE as an agency or an administration. As a 
matter of fact, as the Secretary I am sure will tell you, his 
latest proposal almost mirrors ours with some exceptions, but 
does not make it semiautonomous, creates an Under Secretary. We 
believe that because this gentleman will not be there more than 
another 18 months, unless he is truly a glutton for punishment 
and wants to serve another 4 years, I assume that General 
Habiger might be there or might not be there, I assume Mr. 
Curran might be there or might not be there, we are concerned 
about the future. That is why we want to carve it out, if you 
will, semiautonomous.
    I don't think the AEC is a good example. NSA is a much 
better example.
    Mr. Dingell. I ask unanimous consent to be permitted to 
send written questions to our two witnesses and they be 
inserted into the record.
    Chairman Bliley. Without objection, all members, since time 
is extremely limited today, will be able to send written 
questions to the witnesses.
    At this time I would like to recognize the gentleman from 
Texas, the chairman of the Energy and Power Subcommittee, Mr. 
Barton for 5 minutes.
    Mr. Barton. Thank you, Mr. Chairman. And I am basically 
going to give a statement, then if I have a chance ask a 
question or two, and be around for the second round. I think 
this is the most serious issue that has come before our 
committee in the time that I have been on it. I was chairman of 
the Oversight and Investigation Subcommittee the last two 
Congresses and has been pointed out I am now chairman of the 
Energy and Power Subcommittee.
    I am going to read some of the comments that were in the 
Rudman report; talks about a feckless system of control of 
classified documents, underfunded and poorly trained 
counterintelligence programs, security methods that were naive 
at best and dangerously irresponsible at worst. That is a 
direct quote. It also talks about the fact that these problems, 
when they were highlighted, were blatantly and repeatedly 
ignored; placed the blame on organizational disarray, 
managerial neglect and a culture of arrogance both at DOE 
headquarters and at the labs themselves. Furthermore, the 
Rudman report states, and I quote again, the Department of 
Energy and the weapon laboratories have a deeply rooted culture 
of low regard for and at times hostility to security issues, 
which have continuously frustrated the efforts of internal and 
external critics.
    Finally the report says, never have the members of the 
special investigative panel witnessed a bureaucratic culture so 
thoroughly saturated with a cynicism and disregard for 
authority. Never before has this panel found such a cavalier 
attitude toward one of the most serious responsibilities in the 
Federal Government, control of the design information relating 
to nuclear weapons. Never before has the panel found an agency 
with the bureaucratic insolence to dispute, delay, and resist 
implementation of a Presidential directive on security as the 
Department's bureaucracy tried to do to the Presidential 
Decision Directive Number 16 issued in February 1998.
    It doesn't say this in the report, but staff has indicated 
to the members of the committee that since we have been 
attempting to correct some of these problems, that same elitism 
and arrogance and cynicism apparently is still in the 
laboratory.
    So here are my recommendations, and they are not members of 
the committee, they are not members of the subcommittee, but if 
I were the Secretary of Energy, and if I were the new czar that 
is sitting out there behind the Secretary, I would immediately 
take whatever steps are necessary to terminate the contract 
with the University of California, period. I would do that. I 
think they are the root of the problem.
    I would centralize or ask for legislation to centralize the 
jurisdiction over the weapons laboratories within the House of 
Representatives. Currently they are between the Science 
Committee, the Energy and Commerce Committee and the Armed 
Services Committee. That is too many bosses. I think we need to 
take steps to centralize that.
    I think if it is possible under the Federal service rules, 
every member of the weapons laboratory that it can be shown has 
exhibited this arrogance and indifference should be terminated. 
I think they should be asked to resign at a minimum. And if 
they won't resign, I think they ought to be terminated.
    I think the weapons bureaucracy should be downsized by 
statute if necessary, by administrative action if possible.
    And I think long term we should pass legislation to take 
the weapons laboratories out of the Department of Energy. I 
don't think the Department of Energy ever effectively managed 
them. I think it is an impossible task. I think we should take 
them out, put them in within the Department of Defense, the 
National Security Administration, or some other Federal agency. 
Some may say that that somehow violates the decision made after 
World War II to keep weapons developments in civilian hands, 
but I would point out that the Secretary of Defense is a 
civilian and is appointed by the President of the United 
States.
    So, in short, Mr. Chairman, I think this is a very serious 
issue. I don't think it can be swept under the table. I don't 
think we can spin-control it. I think it needs to be addressed 
immediately, effectively, and comprehensively by the House and 
the Senate and with the full cooperation of the Secretary of 
Energy and Senator Rudman and his panel and General Habiger, if 
he is the man that is in charge of this.
    So that is really not a question as much as it is a 
statement. I guess my question to the Secretary would be do you 
think we can terminate the contract at the University of 
California?
    Mr. Richardson. Congressman, I will make that decision 
after I assess their performance, their improvements. As I 
said, I have a policy of recompeting almost every contract, and 
I will apply the same standards at the University of 
California.
    Mr. Barton. My time is expired, but let me simply say when 
that came up several years ago, a decision was made by your 
predecessor not to recompete the contract, and it was given to 
the University of California again on a noncompetitive basis.
    Thank you, Mr. Chairman.
    Chairman Bliley. The time of gentleman has expired. The 
Chair now recognizes gentleman from Pennsylvania, Mr. Klink.
    Mr. Klink. Thank you, Mr. Chairman. I am sitting here, and, 
of course, I have read, Senator Rudman, your report. I am still 
left with some blanks here. I hope you can help me fill them 
in.
    Mr. Rudman. I will try.
    Mr. Klink. My problem is I don't see how exactly we can 
change that lab culture that you referred to in the report if 
the contractor is the same, the management is the same, the 
employees are the same. You cited that stack of reports, and 
Congress, and GAO and everybody else has done these reports, 
the Energy Department, various agencies within it have done 
these reports saying there are problems. Why in the world would 
this new administration pay any more attention to someone else 
when the defense program has ignored all of those reports, the 
DOE inspector general, General Accounting Office, all of the 
reports that you have cited? You said there were a hundred of 
them. You state that this group of people is even unconvinced 
of Presidential authority. So I can't understand why the same 
people in a new agency would all of a sudden become convinced 
of Presidential authority, in particular when an administrator 
would have a 5-year irrevocable term. Why would they be all of 
a sudden convinced to do what is right and see the light of God 
and bow to the altar?
    Mr. Rudman. Let me try to answer that if I can. First they 
would not necessarily be the same people; and number 2, there 
would be a lot less of them.
    I think that one of the most extraordinary things that has 
been written on this was written yesterday in the Wall Street 
Journal by a scholar at Brookings, Paul Light. Mr. Light did a 
little different analysis than we did and found the following: 
In 1979, there were 10 layers of senior bureaucracy with 56 
senior executives. In 1998, there were 18 layers with 143 
senior executives. It takes 15 to 25 layers to get from the top 
of the Department to the top of Los Alamos. So what we say is 
take a broom and sweep that intermediate bureaucracy out, put 
accountability in directly from a position where if something 
goes wrong, you know who to blame. We are not talking about the 
moving the deck chairs, Congressman, we are talking about 
really changing this organization.
    Mr. Klink. What I am really talking about is at the labs. 
You still--how do we know that we are going to have new people 
or we are going have the same shrinkage of bureaucracy at the 
labs themselves? We understand there are going to be changes at 
DOE, but what is going to happen at the labs? Are we not going 
to have the same people there who have looked at science only 
and not looked at environment, have not looked at security, 
have not looked at safety issues?
    Mr. Rudman. Congressman, let me answer that question, which 
is a very good one. If there is accountability and strong 
leadership without intermediate layers of bureaucracy, and 
these organizations refuse to do as they are told, then I 
assume the Secretary would replace them. This is, after all, 
U.S. Taxpayer money even though they are being done by private 
universities or, in one case, a private contractor.
    What we are saying is that there has been no way for this 
bureaucracy to work with these labs in an effective way because 
there has been no straight-line accountability. Too many people 
have had the responsibility to these labs, including an 
intermediate structure, which boggles the mind. And I submit 
that your staff ought to show the staffing of area offices, 
regional offices, field offices, laboratory offices. I mean, if 
anybody wants to avoid responsibility in this structure, they 
can.
    Now if you are saying that the identical people that are 
there won't change, well, if you are right, then under the 
structure we are recommending, I guess they will be replaced.
    Mr. Klink. Mr. Secretary, what do you plan to do to defense 
programs? What changes do you have in mind for defense 
programs?
    Mr. Richardson. Well, Congressman I have addressed Senator 
Rudman's very accurate claim. I have put lines of 
responsibility that are very clear. Under defense programs, you 
will eliminate some of the middle layers. You give the 
Assistant Secretary for Defense Programs direct responsibility. 
You make that person accountable. You have the field offices 
that are responsible for defense programs report directly. 
Headquarters policy comes from Washington, it comes from me, 
and that is very clear.
    I think one of the things that we need to do is acknowledge 
that there have been some reforms, and also to say that the 
labs don't look at health, don't look at safety, don't look at 
security. With all due respect, I will defend my lab employees. 
These are patriotic, these are strong-willed people, they are 
scientists, but the culture is changing.
    How do you do that? By enforcing accountability, by having 
zero tolerance policy for leaks, by telling them who is the 
boss, defense programs and me.
    I am ready to look at some of the Senator's very good 
recommendations, upgrade the defense programs, create an Under 
Secretary for Nuclear Stewardship. We are ready to do that, to 
strengthen that, to better deal with security, to better deal 
with many of the issues that you have asked.
    Mr. Klink. But, Mr. Secretary, do you agree with the 
comment of the reporter with Senator Rudman that you have this 
bloated bureaucracy and that there are, in fact, too many 
people doing too many things, and if that is the case at the 
top of defense programs, the top level of the defense level, 
not the intermediate level, the top level, are you going to get 
rid of some people, narrow that down to fewer bodies, more 
direct responsibility, or are we still going to just shuffle 
the bodies around?
    Mr. Richardson. I don't accept the claim that we have too 
many people. This Department has downsized 25 percent in the 
last 3 years, and I need strong people and plenty of good 
people to deal with the defense programs. We are talking about 
nuclear weapons here. If I need more security people, I am 
going to ask you for them. So I am not necessarily--I am 
changing the boxes around to eliminate the layers of 
bureaucracy, that is what I am doing with defense programs, to 
have more accountability.
    The problem is that Los Alamos and Sandia felt that they 
were these independent operators, and they didn't have to 
answer to anybody. That has changed. And I think we have to 
acknowledge that that is happening. And I can tell you right 
now that the security stand-down that we are doing with Los 
Alamos and Sandia this very day, where everything has stopped, 
is working, and we are getting our act together. And I think to 
just say that we are beyond help or dysfunctional is not going 
to correct the problem.
    Chairman Bliley. The time of the gentleman has expired. The 
Chair now recognizes the gentleman from Ohio, Mr. Oxley.
    Mr. Oxley. Thank you, Mr. Chairman.
    Welcome, Senator Rudman and our old friend Bill Richardson.
    Senator, you mentioned in your report the culture of 
arrogance. Is that arrogance on the part of the DOE bureaucrats 
or on the part of the contract researchers?
    Mr. Rudman. About equal.
    Mr. Oxley. And you also described the DOE relationship with 
the FBI counterintelligence experts up to the mid-1990's, 
quote, strained at best. Where does that relationship stand 
now? Is DOE making effective use of the FBI's capabilities?
    Mr. Rudman. I believe Secretary Richardson has made major 
progress in the areas of counterintelligence and security, 
including relationships with those agencies and asking them for 
help, reaching out try to reorganize things. We commend the 
Secretary. Had I had a chance to give my entire statement, 
which, because of time, I realized I couldn't, you would have 
found a section in there that talks about what the Secretary 
has done.
    We don't have a problem with that. We think he has done a 
great deal. But we have serious concerns that this bureaucracy 
has nine lives, and when Bill Richardson is off in New Mexico, 
wherever he goes after his tenure, and Mr. Curran and General 
Habiger are doing something else, and the new Secretary of 
Energy is faced with a different kind of an issue, like 
Secretary Watkins was when we had the problem with nuclear 
waste, environmental pollution, I submit to you that there 
isn't anything in the record of a hundred reports that 
convinces me that anything that the Secretary of Energy does 
here or that the Congress does that does not radically reform 
the organization of this, you will fail and fail once more. I 
will quote one of the finest corporate executives in America. 
Mr. Galvin, Motorola, was asked to do an independent study. 
What did he say, what, 4 years ago, 3 years ago? He said, 
unless you radically restructure this, it won't work.
    Now, I understand bureaucracies. They are extraordinarily 
good at perpetuating themselves. And this one may after we are 
all done. PFIAB has no constituency, we have no obligation 
other than as citizens. We reached this conclusion inescapably 
after reading 50 other reports. I have high regard for the 
Secretary and the people that he kept. I have no confidence 
that that will continue once he is gone.
    Mr. Oxley. Thank you.
    Mr. Secretary, I would like you to respond to that 
particularly in relation to how this culture of arrogance or 
this strained relationship over the years came to exist between 
the FBI counterintelligence operations and your employees.
    Mr. Richardson. Well, Congressman, I know you have 
experience with law enforcement and the FBI, so I want to be 
particularly precise. Counterintelligence in the past, in this 
past administrations, in yours and mine, were not given the 
priority they deserved at the labs. Counterintelligence types 
were dismissed, security was not considered important, we are a 
science lab, et cetera. That has changed. And I can assure you 
that my relationship with Louis Freeh on many of these law 
enforcement issues, issues relating to the suspect, issues 
relating to the counterintelligence plan, is excellent.
    I have an FBI agent running the counterintelligence program 
at all of our labs at DOE. It is Ed Curran, 37 years 
experience, has been involved in the Ames and Nicholson 
espionage cases. He is the best in the business. And I believe 
that our plan is working. Our counterintelligence budget has 
quadrupled. It is close to $50 million thanks to the help of 
the Congress. We have FBI and counterintelligence people at 
each of the labs. We are not perfect. We can use some 
improvements, but we have got a good relationship right now.
    And I want that counterintelligence director to report 
directly to me, to have direct access to me. And I have some 
concerns about that counterintelligence person reporting 
through another entity. But I think this is something that we 
can work out.
    Mr. Oxley. What other entity?
    Mr. Richardson. Well, under a semiautonomous agency, I just 
want to make sure that the counterintelligence chief has direct 
access to me and reports directly to me.
    I want to make one final point, Congressman Oxley. We have 
said we are ready in the administration to codify many of these 
changes sugggested by Senator Rudman and by Congressman Cox and 
Dicks' committee. Many of you all already voted in the armed 
services bill for some codification in the counterintelligence 
area, provisions that we think are quite good.
    Mr. Oxley. Thank you, Mr. Chairman.
    Chairman Bliley. The time of the gentleman has expired. The 
Chair now recognizes the gentleman from Ohio, Mr. Sawyer.
    Mr. Sawyer. Thank you, Mr. Chairman.
    Thank you both for being here and for your candor today.
    Mr. Secretary, the recommendations that have been made by 
Senator Rudman's panel have focused on certainly the highest 
risk arena of the work that you do in terms of nuclear weapons. 
But let me ask you, are there other arenas that demand security 
that are unaddressed by the report as you understand it?
    Mr. Richardson. Yes. And this is why I want a security czar 
that deals with the entire complex. We have security problems 
in our nuclear materials in fissile materials. For instance, 
Rocky Flats contains nuclear materials. It wouldn't be covered 
under this very good reorganization that the Senator has 
proposed. And what I am simply saying is let's go beyond his 
security concerns for the nuclear weapon complex. Let's deal 
with security at science labs, too. You have sites in Ohio that 
deserve better security. And so what I want to do is have a 
comprehensive approach to security. This is why we have General 
Habiger as the security czar, a czar that would control and be 
able to deal with security across the complex.
    Mr. Sawyer. Let me offer another thought that underlies, I 
think, a great deal of what both of you are saying. The culture 
of science, it seems to me, has always been made as rich as it 
has been in the United States by its openness, by the culture 
of peer review, of sharing ideas, leaving them open to 
competition and letting them be criticized.
    That is clearly in direct conflict and in deep tension with 
the kind of work that is done in weapons labs and in the 
settings where the science that underlies weapons technology is 
developed. It seems to me that part of our problem is to try to 
retain the richness of that scientific interaction and the 
capacity to question one another at the same time we are 
protecting the security of the technology. Would either of you 
care to talk about that and the consequences of the two 
different structures that you have offered for that particular 
tension between science and technology and weapons?
    Mr. Rudman. Mr. Sawyer, I will be brief. You have just 
eloquently essentially stated one of the things that we state 
in our report. In fact, we say in the report, and probably not 
as well as you said it, with either proposal it will be 
important for the weapons labs to maintain the scientific 
contact on a nonclassified scientific research with other DO 
labs and the wider scientific community. To do otherwise would 
work to the detriment of the Nation's scientific progress and 
security over the long run. This argument draws on history. 
Nations that honor, advance freedom of inquiry have fared 
better than those who have sought to arbitrarily suppress and 
control the community of science, which is what you have said.
    I happen to think that you could do it quite well in either 
model that we have advanced. Certainly the current model 
promotes that, but unfortunately it allows other things to 
happen.
    Mr. Sawyer. Mr. Secretary, could you talk to that point as 
well?
    Mr. Richardson. I think we have a little bit of a 
difference, because if you look at these labs, you go to Los 
Alamos, Sandia, Livermore, right next to each other you have 
nuclear weapons work and life sciences. You have environmental 
science. And I am concerned, by giving such separation, that 
you are going to cutoff the essential science work from the 
weapons work. It is not a very big difference that we have, 
because I think we could accomplish both by acknowledging that 
the weapons labs, at least the nuclear weapons labs, their 
major mission is national security work. And we are ready to 
create an Under Secretary that gives them priority, that gives 
them strength. What I don't want to do is blur the lines of 
authority that I would have between the two science and 
national security components.
    Mr. Rudman. I would simply say, Congressman Sawyer, if you 
look at page 47, in the interest of time I am not going to read 
it, the very point that you have just addressed with the 
Secretary is covered there. We agree with you totally, and we 
think we have addressed it in this report. The middle of page 
47.
    Mr. Sawyer. Mr. Chairman, I see my time has expired.
    Chairman Bliley. The Chair now recognizes the gentleman 
from Michigan, Mr. Upton.
    Mr. Upton. Thank you, Mr. Chairman.
    And welcome to you both, our two witnesses today.
    As I have begun to look at the Rudman report, and I have 
looked over a number of the GAO reports and talked to folks at 
DOE, I know that there is no more important a job than security 
at these labs. As I talk to constituents across the country, 
they want to make sure that, in fact, these labs are safe. And 
they are appalled, as you indicated, Senator Rudman, in your 
testimony over some of the details that have been shed in the 
New York times and other reports.
    And, Secretary Richardson, I notice back in May, on May 25, 
you said, I can assure the American people that their nuclear 
secrets are now safe at the labs. Yet when I see and read the 
Rudman report and enormous backlogs of security, background 
checks that haven't been undertaken, the polygraph tests, we 
look at some of the labs in terms of, you know, the hogwash 
item that Senator Rudman raised, it doesn't seem like it all 
comes together. And it almost goes back to 5 Senator Rudman's 
comments at the very beginning when he said that there were 
folks that wanted to just delay and delay and fight off every 
major reform, and in the end nothing happens, and afraid that a 
few years from now the same report will be back. How do you put 
the two comment s in sync?
    Mr. Richardson. Well, first of all, I think if you read 
Senator Rudman's report--and I will let him speak for himself--
he does acknowledge that progress has been made in security and 
counterintelligence measures. He does say he doesn't think we 
have gone far enough. But I think progress is acknowledged.
    Second, what I meant in that statement was that we were 
addressing the security lapses with our best efforts at 
counterintelligence, our best efforts at security. I can say to 
you that the Presidential directive of February 1998, his 
counterintelligence measures are in place. I think that is 
acknowledged in the report; second, that 85 percent of the top 
tier recommendations are in place, we have a polygraph plan in 
place. You got to do it carefully. You can't just polygraph 
anybody. It has got to be done on substance, not on life-style. 
It has got to be prepared properly because they are 
controversial. And we are one of the few agencies that is doing 
it.
    Our foreign visitors program, I believe Mr. Curran will 
tell you, 100 percent of the background checks are taking 
place.
    Mr. Upton. So that is happening now; the background checks 
on all foreign visitors are happening now?
    Mr. Richardson. Yes.
    Mr. Upton. Is that for folks that are staying here more 
than 30 days or less?
    Mr. Richardson. This is any scientist from a sensitive 
country, 100 percent of the background checks are being done 
now.
    They are happening. And I have said--I have been on the 
record on this before, but what I want, Congressman, is if 
there is a problem and somebody says, all right, your statement 
is not 100 percent correct that the nuclear secrets are not 
safe and secure, I want to see the evidence. Show me who is not 
observing counterintelligence and security policy. Give me some 
concrete examples, and I will take action.
    I am the one out in the trenches doing this, and I want to 
hear directly. I think Senator Rudman has pointed out some 
areas that we need to work on. We are doing that. Congressman 
Cox's report did, too. But I need direct evidence so I can 
correct the problem. There have been some that say, well, you 
know, the security is not happening. I want to see tangible 
proof of violations of problems so I can act on them.
    Mr. Upton. Now, you said--Secretary Richardson, you said in 
your opening statement that the Rudman report was hard-hitting 
and thorough, yet you told Los Angeles Times last week, I want 
to see evidence from the malcontents he has been talking to, 
referring to Senator Rudman; I want to see evidence of nuclear 
security problems.
    How does last week fit with this week?
    Mr. Richardson. Well, very clearly.
    Mr. Upton. Other than the fact that you are here today.
    Mr. Richardson. Well, very clearly. A lot of malcontents 
went to Senator Rudman. I want those malcontents to come to me 
and tell me where these problems are. You know, I am ready to 
talk to dissidents and malcontents, and I have done so, but I 
want the evidence. I want to see where we are weak. That is 
what I meant.
    And I encourage the process of whistle-blowers, from those 
who see problems. As part of these reforms, there is an 
independent commission that is being proposed by Senator Warner 
of Virginia. I am ready to accept it, outside scrutiny, 
independent oversight, something this committee has always 
wanted, independent oversight so we can send somebody to the 
labs on a moment's notice unannounced to see if there are 
problems. I am ready to undertake that scrutiny.
    Mr. Rudman. May I just have one brief response? There was 
something said there I cannot leave. I am not sure the 
Secretary meant it the way it came out; at least I hope he 
didn't. We didn't have any volunteers come to see us. We didn't 
have a bunch of malcontents, you know, coming in from New 
Mexico and Oakland and Ohio and saying, let me tell you about 
this horrible place that I work. We carefully selected who we 
invited to come in to an intense session before the PFIAB, 
behind closed doors. And a lot of those folks, I will tell the 
Secretary, were fairly high-level folks in your Department or 
across the country, former Secretaries, former deputies, 
current people with high positions. They weren't malcontents. 
They were people who had concerns.
    I want to just correct that mischaracterization.
    Chairman Bliley. Thank you.
    The Chair now recognizes the gentleman from Wisconsin, Mr. 
Barrett.
    Mr. Barrett. Thank you, Mr. Chairman, and welcome to you 
both. It is a pleasure to have you here. You will have to 
excuse me. I just came in late, and, frankly, I am just trying 
to get up to speed on this, so some of my questions might be 
pretty elementary. They pretty much relate to the whole issue 
of external regulation, and I know, Senator Rudman, that you 
were the one who basically chaired the report or put the report 
together.
    In preparing this report did your panel make 
recommendations as to whether the Department's nuclear programs 
should be subject to external regulation?
    Mr. Rudman. Would you define ``external regulation'' for 
me?
    Mr. Barrett. No, I won't. I am not saying that to be 
flippant. I am just curious so I have a better understanding as 
to whether you did look at the whole issue of external 
regulation.
    Mr. Rudman. We did not. That was not within our charge at 
all. We looked at security issues alone. And the answer is no.
    Mr. Barrett. Okay. Just because it wasn't part of the 
charge.
    Mr. Rudman. It was not at all.
    Mr. Barrett. I may be showing you my ignorance, but I want 
to be sure I understand exactly what the panel did.
    The Defense Nuclear Facility Safety Board, what do you see 
as its role, and what did the panel see as its role?
    Mr. Rudman. Well, they are an oversight group. There are 
several others. We seriously question whether they have been 
working the way they should work. We believe that one of the 
reasons none of these oversight groups works very well is it is 
too much bureaucracy to layer.
    I will disagree with an earlier statement that the 
Secretary made. I don't argue with the fact that you might need 
more security people, more FBI people, but I will tell you when 
you look at the slots, and all of the offices leading up above 
the laboratories all the way to the Secretary, I think it is so 
cumbersome up there, and that was the point of an interesting 
piece by a scholar at Brookings yesterday that was in the Wall 
Street Journal. I think you have got to slim the place down.
    Mr. Barrett. I understand that, but, again, so I understand 
the role of your panel, did it gauge the performance at all of 
that board?
    Mr. Rudman. We did not particularly look at the performance 
of the board. We did not. We looked at the performance of 
another board, I think, with another name.
    Now, what is the name of that one?
    The Security Management Board, which was supposed to solve 
some problems, only met, I don't know, two or three times over 
a long period of time, and some of the members felt that they 
didn't accomplish very much, and I guess they were right.
    Mr. Barrett. Okay. And under your proposals would the 
defense board continue to exist? What role do you foresee?
    Mr. Rudman. We have left that open. That is up to the 
Congress to decide. We believe that Senator Warner has made a 
pretty good proposal on the Senate side. It was made before the 
report was written, so we embodied it in this report as an 
independent oversight board. Now, the Secretary might want 
other oversight boards, but I would think one good one over 
this part of the agency would suffice.
    Mr. Barrett. Would your recommendations about a new 
oversight agency, is that--again, is that driven by the 
security concerns?
    Mr. Rudman. It is driven by a history that there has not 
been sufficient oversight. And let's face it, Secretaries of 
departments as big as this one have a lot of other 
responsibilities. If you have a good independent oversight 
board that reports directly to you, made up of outsiders that 
you pick carefully, they can be of enormous help. I might point 
out that is precisely what the PFIAB is of the President of the 
United States.
    Mr. Barrett. The reason I ask you about security, there are 
other issues with nuclear facilities like health and safety. 
Who would oversee those issues?
    Mr. Rudman. The Secretary is better to answer that 
question. We did not address that.
    Mr. Barrett. Okay. Mr. Secretary, again, if the defense 
board were not to exist, what would be the--who would be 
responsible for the health and safety concerns at the 
facilities?
    Mr. Richardson. Well, under my reorganization, health and 
safety are given top priority, and I think they should be. We 
have an Office of Safety, an independent oversight board and 
Office of Safety that exists today. Safety has to be a top 
priority. I think that every entity should be subject to health 
standards. I don't think anybody should be immune just because 
you are a nuclear weapons complex. I think that there should be 
independent oversight across the board.
    Now, I am willing because of the importance of nuclear 
weapons work, because of the security concerns that have been 
raised, to give the nuclear weapons area an Under Secretary, an 
organization of some kind, to better streamline. But I am 
wondering whether we are excluding from proper oversight an 
entity that like anybody else, like me, like you, should 
conform to certain safety and health standards.
    Mr. Barrett. Thank you, Mr. Chairman.
    Mr. Upton [presiding]. Thank you.
    Mr. Cox.
    Mr. Cox. Thank you very much.
    I would like to pick up on the topic that was under 
discussion a moment ago, and that is the malcontents, the 
people that are coming in and talking to you, because I know 
that the Secretary feels that he needs more evidence that these 
problems exist or that otherwise we are--actually I ought to 
let you tell me what you think about why you are saying you 
need more evidence. What do you mean by that, Mr. Secretary?
    Mr. Richardson. Well, what, Congressman Cox, I will do is 
go straight to your--the claim in your report that you made, 
and that was that there were serious severe security problems 
remaining. And I didn't get the sense in your report that the--
which was completed in December--that you had acknowledged the 
number of measures that we have made, and that was my 
reference. Now, again----
    Mr. Cox. I mean today. By the way, as you know from having 
read the classified as well as the unclassified report, and now 
enough of this has been made public that we can state is it 
here, the source for that is Ed Curran, who testified under 
oath, and we quoted from him with quotation marks around what 
he said in the transcript.
    Mr. Richardson. But very clearly to you in open testimony 
amended that to say----
    Mr. Cox. No. No, it was not testimony, it was on a Sunday 
news show months later.
    Mr. Richardson. Well, he very clearly stated that at this 
point we had achieved 85 percent of our reforms.
    Mr. Cox. No, what he told us under oath it was going to be 
sometime in the year 2000 before we could get around to this.
    Mr. Richardson. I wish Mr. Curran were here, but he 
contradicts what you are saying.
    Mr. Cox. Well, he never did.
    Mr. Richardson. Well, I think you should ask him.
    Mr. Cox. Let me not argue with you here, because I think 
the problem we are having is that we have now, the President's 
advisory board coming to us, and they did a very fine job, and 
their criticism of them was much more harsh than what was in 
our select committee report. And what they are saying is that 
they listened to people in a setting that permitted them to let 
their hair down. These weren't malcontents that walked in.
    I guess my question is what would happen if we said instead 
of PFIAB, the President's Foreign Intelligence Advisory Board, 
giving people that they selected the opportunity to come in and 
say, you are not going to be terminated for what you tell us, 
there is no transcript made of what you said, we are not going 
to in any way interfere in the process of taking your testimony 
with what it is you have to say; what if instead we had to wait 
until somebody in a much more formal way had to come in and 
talk to you, the Secretary. Would we ever know anything?
    Mr. Richardson. I have not discouraged this process of 
either of you or Senator Rudman talking to anybody he wants. In 
fact, I have rewarded somebody who I felt was a whistle-blower 
who made a difference, who persisted, a man by the name of Mr. 
Trulock, who provided a lot of evidence to your committee. So I 
don't care who talks to you. I don't care what scrutiny you put 
me under. All I want is if you have evidence of problems, that 
you tell me about those problems; and second, if there is 
progress being made, if there are changes being made, if these 
changes are working, as Mr. Curran and others are trying to 
implement, that you acknowledge it. That is all I am asking. 
And I fail to see that acknowledgment of the dramatic steps 
that we have taken.
    Mr. Cox. As you know, our report was written in December 
1998, and it was accurate as of that date. So I would ask the 
chairman of the Investigative Task Force and the president of 
the President's Foreign Intelligent Advisory Board, who is with 
us today, who I wish to commend for your work, what has 
changed, and do you discount the evidence that you heard in 
these interviews that you conducted? Is there enough change now 
that we are in June that we can say these problems are behind 
us?
    Mr. Rudman. No, of course not. And I don't think the 
Secretary--it seems like ships passing in the night. I don't 
think the Secretary is testifying here today that everything is 
safe and secure. I think the Secretary is probably saying they 
put a lot of things in place to try to make that happen. I will 
tell you unequivocally I don't believe that no matter what they 
do, with all the--if you passed a bill tomorrow, the President 
signed it, you did exactly what we said, created an agency 
within the Department, kept counterintelligence reporting to 
the Secretary, did all of that, it will take a couple, 3 years 
before you can have an assurance that you got a safe situation 
out there. Counterintelligence, poly graphing, all of this 
takes enormous amounts of time.
    No, I don't think that it is safe now. I don't think the 
Secretary does. But let me just disagree with one thing so 
everybody knows where I am coming from. There is not a question 
of whether or not you can prove that the Cox committee's 
findings were all right, or some were right and some were 
wrong. You and I have discussed this, Congressman Cox. We say 
in our report, we agree with a lot of it; we don't agree with 
all the conclusions. And people can disagree on the same 
intelligence analysis.
    What we do say is that it is the opportunity for espionage 
that your committee essentially reported on, that Mr. Trulock 
reported on, that was of extraordinary importance to the 
country, is the opportunity--it is the opportunity for further 
mischief that we are concerned about. We think the one way that 
you get that changed is by streamlining this agency and making 
it very, very functional and reporting directly to the 
Secretary. That is what we think.
    Mr. Cox. My time is expired. I wonder if I might just ask 
for a brief update on very important issue in your report. In 
the President's Foreign Intelligence Advisory Board report, you 
state that remote dial-up access to unclassified networks 
without any monitoring by the lab is possible at least as of 
the date of your report. Is that still possible? Do we still 
have problems with----
    Mr. Rudman. I have someone here who is an expert in that 
area from the Intelligence Community. If you will give me 30 
seconds, I will answer your question.
    We cannot give you any more information that is more 
current than 13 days ago; 13 days ago that statement stands. 
Possibly something has done to change it. That was true 13 days 
ago.
    Mr. Cox. With your permission I would ask the Secretary 
then to respond.
    Mr. Richardson. I think it applies to unclassified systems 
only.
    Mr. Cox. Yes. We are talking about the unclassified 
network, such as the network to which the millions of lines of 
nuclear codes were transferred.
    Mr. Richardson. I understand that there is a firewall up, 
and the only thing that is accessible is the Web pages and the 
unclassified provisions. So there is a firewall.
    Mr. Cox. Has that changed in the last 13 days?
    Mr. Richardson. Yes. In the last month.
    Mr. Cox. I just wonder if you are talking about before or 
after the 13 days ago date that Mr. Rudman is talking about.
    Mr. Rudman. Congressman, let me just say--and we are in an 
open session, and you know this is--PFIAB deals with these 
issues all the time. This is something I know something about. 
I don't take any confidence whatsoever from the statement I 
just heard, that the Secretary may believe it, but I suggest he 
talk to some experts in cyberpenetration. These firewalls are 
penetrated all the time, and that is all I want to say. But it 
has got to be looked into very closely. And quite frankly, we 
have people that we have talked to that are the world experts 
on this issue, and I expect you could talk to them, too. I am 
sure the Secretary will.
    I just don't think we ought to give people assurances about 
things we are not certain of. This did not happen on Bill 
Richardson's watch. He is not responsible for what happened, he 
is trying to fix it, and I don't think he ought to try to 
defend something that he can't defend. That is my honest 
opinion. I will tell you what I think here.
    Mr. Richardson. I am not trying to defend it. You asked me 
a question whether firewalls have been set up, and I answered 
yes. Are they perfect in the unclassified area? No. The 
firewalls that deal with security and classified information, 
we are going through a stand-down right now to determine that. 
My people tell me that they are. Again, we need time to do this 
right. And that is exactly what we are doing.
    Mr. Cox. Mr. Chairman, I thank you, and I wish again to 
thank both of our witnesses, which I should have done at the 
outset of my time, for the energy and work that have you been 
in here, and notwithstanding what I take to be a little 
defensiveness on the part of the Secretary, we do recognize the 
work that you have done, and I publicly recognize it and wish 
to do so here again today.
    And insofar as Mr. Curran is concerned, I think it is 
pretty clear that what he was telling our committee he was 
telling us in real time at the end of 1998, and what he has 
said subsequently is that that situation has been changed, and 
I think it is your point here today that you are trying to 
accelerate that process where we were at the end of 1998, when 
our committee was investigating this, was that we were off in 
the year 2000. And you hope now you can accelerate that. And 
obviously the purpose of this oversight is to help accelerate 
that process, and we take very seriously the expressions of 
Senator Rudman that we shouldn't have to wait for a newspaper 
account or media reports or what have you in order to do our 
job up here, and the extent of our job here today is to 
continue to focus white heat on this. That is what we intend to 
do. I thank the chairman.
    Mr. Upton. Mr. Burr.
    Mr. Burr. Thank you, Mr. Chairman. Mr. Secretary you have 
used some words over and over again. One of them is 
``polygraph.'' let me just ask you, the Washington Post 
yesterday reported that the first DOE employees to be 
polygraphed under the new program, and the only ones so far, 
are 57 of the 60 members of the counterintelligence staff. Is 
that an accurate report in the Washington Post?
    Mr. Richardson. Yes, because we are the source of that. I 
think it is close to 60 now.
    Mr. Burr. Let me ask you, do you know Stu Nagurka? Am I 
correct?
    Mr. Richardson. Yeah. He is my press Secretary.
    Mr. Burr. Is he here today?
    Mr. Richardson. I don't see him.
    Mr. Burr. Let me read a statement that he made on May 30 to 
the Sacramento Bee. The Energy Department spokesperson said 
orders have gone out for a large number of Department 
scientists to be subjected to periodic lie detector tests. I 
know they have begun, Nagurka said.
    Is that an inaccurate statement on his part that, in fact, 
poly graphs had begun with Department scientists?
    Mr. Richardson. His statement is accurate. He said order.
    Mr. Burr. No, his statement says, I know they have begun. 
They have gone out, I know they have begun.
    Mr. Richardson. The orders have begun.
    Congressman, let me just tell you about poly graphs, 
because this was a very controversial provision that I approved 
amidst great opposition within the labs, within the 
bureaucracy, within the government, within civil liberties 
groups. If we are going to do poly graphs--and by the way, they 
began in April, I believe the 27th. When we have polygraphs, 
you have got to be careful how you do them. They have to be 
based on national security.
    Mr. Burr. So all scientists are not going to go through a 
polygraph.
    Mr. Richardson. That is correct.
    Mr. Burr. Let me ask you about the contract, if I could. 
You stated earlier that you would consider the University of 
California contract based upon the facts. And I would like to 
look at some of those facts. Does the contract as written 
currently require the University of California to carry out the 
security directives that are set by the Department of Energy?
    Mr. Richardson. Yes. All our contracts have--ensure that 
security and other aspects are adhered to, yes.
    Mr. Burr. Did you in 1995 in a letter to Secretary O'Leary 
ask her to open up the bidding process so that people could bid 
against the University of California for the Los Alamos 
contract?
    Mr. Richardson. Yes, I did.
    Mr. Burr. To your knowledge, has the university ever been 
penalized through a fee deduction based upon their annual 
evaluation rating that is done by the Department of Energy?
    Mr. Richardson. The policy now is that the subcontractor is 
penalized, and I believe at the time when I was a member of 
this committee, which has been my policy, which is that there 
should be open competition for all contracts.
    Mr. Burr. In fact, is there not an annual evaluation rating 
that is done by the Department of Energy on all their 
contractors?
    Mr. Richardson. No, not on every contract. For some 
contracts--the University of California contract--there is at 
least a yearly component, yes.
    Mr. Burr. In fact, one of those components is an evaluation 
performance on safeguards and security. And one was done last 
year on the University of California where they received a 
rating of excellent by the Department of Energy. Given what you 
know today, did somebody at the Department of Energy make an 
inaccurate evaluation?
    Mr. Richardson. I don't know about that test. I do know 
that----
    Mr. Burr. These are the ratings that DOE gives their 
contractors based upon their performance.
    Mr. Richardson. I don't know if that is accurate. I have 
never heard of that excellent rating. When I recently conducted 
very extensive security reviews in Los Alamos, which is the 
University of California, main contractee, did not receive an 
excellent rating. In fact, it was marginal. It was marginal. So 
I don't think your report is up to date.
    Mr. Burr. I would challenge you to go back and look at the 
internal evaluation done for the purposes of whether there was 
a deduction of their fee based upon their lack to reach a good 
or above rating.
    Let me ask you again, given what you know today, would you 
consider--not asking you for a definitive answer--would you 
consider a cancellation in their contract?
    Mr. Richardson. I can't give you that answer. I will make a 
judgment at the end of the term, and it is going to be based on 
whether they have performed well on security, whether they have 
achieved their scientific goal.
    Mr. Burr. Do you believe they have fulfilled their security 
requirements based on----
    Mr. Richardson. Congressman, I don't want you to blame the 
University of California for the security problem. You should 
blame the Department of Energy personnel. You should blame Los 
Alamos. It is a collective blame. To set up the University of 
California as a straw man I don't think makes sense. Now, that 
doesn't mean that we shouldn't look at every contract, as I 
have, and I have generally recompeted almost every one, despite 
a lot of political pressure to the contrary. When the 
University of California contract comes up--and it is not up 
for a year, year and a half----
    Mr. Burr. It is not up until 2002, and with all due respect 
to you, I certainly appreciate the effort that you have made. 
Part of my questions are to distinguish--if I could, Mr. 
Chairman--are to distinguish whose responsibility it is. We 
have tended to watch a process that I think Senator Rudman's 
committee has said that there is a tremendous lack of 
confidence that exists with the current DOE employees to carry 
out any internal revamping of the security measures at these 
facilities. Clearly that is substantiated if the DOE internal 
performance rating was an excellent on security and----
    Mr. Richardson. Congressman, that was before I came, and I 
don't know who did that. That is one of the reasons we need to 
reform the Department, because you get these ratings that are 
obviously wrong. That is what I want to change.
    Mr. Burr. So your statement would be then, it is the 
Department of Energy's responsibility, it is not the University 
of California?
    Mr. Richardson. The Department of Energy contracts with the 
University of California. It should be a collective 
responsibility. It is not just one or the other. The University 
of California needs to do better on security. That is painfully 
evident. I am not taking that out. I am also saying to you, 
which maybe you are having difficulty accepting, is that we 
have made dramatic progress on security and counterintelligence 
with the labs, with the University of California. The 
University of California has just undertaken a review of their 
own. Nobody is disputing that there have been security lapses. 
We are trying to fix it.
    Mr. Burr. I appreciate the chairman's indulgence and would, 
just for the record, make the Secretary aware that the current 
contract runs out in 2002, but based upon the requirements, if 
the government were to open the bid process, the Secretary 
would have to notify the university by the end of next year. 
And my question didn't deal with the whether we would open the 
bid process, it dealt about would the Secretary, based upon his 
findings, consider cancellation of the current contract, which 
is certainly within the purview of the Secretary. And I yield 
back.
    Chairman Bliley. The gentleman from Pennsylvania, Mr. 
Greenwood.
    Mr. Greenwood. Mr. Chairman, Secretary Richardson, I think 
my constituents would be a little bit surprised had they been 
aware of the fact that there were so many thousands of visitors 
going through these weapon laboratories. I think they would 
even be a little more surprised to learn that a lot of them 
were foreign visitors; might be shocked to learn that those 
foreign visitors were from countries like China. They would 
probably be knocked over if they knew that some of those 
Chinese visitors were intelligence officers, and they just 
wouldn't believe it at all if we told them that some of them 
were known spies. But all that seems to have been the case.
    It is my understanding that the Department's Inspector 
General reviewed the last two Department status reports to the 
President of nuclear security, one in 1997 and one in February 
of this year. And the IG recommended that the security risk 
posed by the foreign visitors' program be upgraded in the 
reports and flagged for the President. But DOE, as my staff 
tells me, didn't do that, and at least once under your tenure 
that was the case.
    Can you help us understand why the Department did not 
concur with the IG's recommendations for flagging this issue 
for the President?
    Mr. Richardson. Well, I don't know where your staff is 
getting this information. I do not believe I ever received any 
report like that. I can tell you that we have dramatically 
upgraded the foreign visitors' program. This was part of 
President's Clinton's Presidential Decision Directive 61.
    Mr. Greenwood. I am told--if I may interrupt--the answer to 
your rhetorical question was from the Inspector General in the 
Department of Energy.
    Mr. Richardson. Well, you know, this is news to me. I 
believe very strongly that we have upgraded the security of 
this program. You know, I can say to you that the majority of 
the Congress has agreed with me, to keep the foreign visitors' 
program. Some of the measures that are in the armed services 
bills such as moratoriums, are a bad idea and other very strong 
controls over the foreign visitors' programs are good, and we 
will go further. But I am not aware of the inspector general 
saying anything to me or giving me a report about flagging the 
President on anything.
    [The following was received for the record:]

    As indicated by the actual Accountability Report excerpted below, 
the President has been fully informed of counterintelligence matters at 
the Department and had as a result, on February 11, 1998, issued a 
national security directive (PDD-61) to the Depamment to make 
improvements in this area. As the Report also indicates, the Department 
was reporting its progress in implementing these improvements as an 
emerging issue, including, as stated in the Report, the preparation and 
submission of an action plan to the President's National Security 
Advisor. This action plan was submitted to the White House on November 
13, 1998. Although the Inspector General criticized the Department for 
not further elevating these issues in the Accountability Report, the 
Department believed that these counterintelligence matters had already 
been reported to the President through other communications, as 
evidenced by the President's issuance of PDD-61. Consequently, the 
Department did not agree with the Inspector General recommendation.

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    Mr. Greenwood. Okay. The Rudman report also mentioned that 
there was an incident where there was an illegal wiretap that 
was discovered in the lab, and that the responsible employee 
confessed, but was not prosecuted. If this question hasn't been 
asked in my absence, and I apologize if it has, was the tap 
discovered in a classified area of the lab?
    Mr. Richardson. We have no knowledge whatsoever about this 
report. And I directed my counterintelligence people to find 
out about it, and they gave me this answer, too.
    I will say to you that there was a--there was a 
nonespionage-related incident that was presented by the FBI to 
the Special U.S. Assistant Attorney for Prosecutorial Action, a 
nonespionage-related incident. The special assistant declined 
to prosecute. The DOE then pursued prosecution under New Mexico 
State law as the act violated the New Mexico Law Code. The 
subject of the investigation pled guilty in court, was 
sentenced to a fine and probation. And the Department of Energy 
took administrative action against the subject that included 
the suspension of his Q clearance, reassigned him to an area 
that required no classified access. Based on the reassignment 
action, the subject was forced to accept an estimated $30,000 
reduction in annual salary. So this was a nonespionage 
incident.
    Mr. Greenwood. I think we are all a little curious up here. 
What sort of information was which employee trying to gain 
through a wiretap? Is this a romantic issue?
    Mr. Richardson. I don't know.
    Mr. Greenwood. Senator Rudman, did you want to comment on 
either?
    Mr. Rudman. I would not comment on either one of them. They 
are both law enforcement matters. We illustrated them only to 
show the incredible things that were happening in these 
laboratories long before the Secretary became Secretary, and 
for which no apparent tough measures were taken.
    Now, if I understand it correctly, one of the reasons we 
cited it is this individual--and, again, this is before this 
current administration--was reassigned. I think I am correct 
about that, he was reassigned, but his security clearance was 
taken. I don't understand how anybody who attempts to wiretap a 
government facility isn't fired on the spot and just shipped 
out. It would happen in any private company I know.
    But there was such a permissiveness in this place about 
everything, and we illustrated that. There were other examples, 
but not in open session can they be talked about.
    I mean, again, why the Secretary and his staff defend those 
kind of actions, if they are, is beyond me. They didn't do 
them.
    Maybe there is something in the water over there. Maybe 
once you work in the Department of Energy, you defend it to the 
death, even if the people 10 years before were damn fools, as 
many of them were. I mean, this was foolishness. This person 
should have been fired.
    Your constituents, told that somebody wiretapped and 
suddenly got their clearance jerked, but went back to work and 
got their pension and health care, they wouldn't believe it. 
They would get fired from their job from wherever you are from 
in Pennsylvania with alacrity.
    Mr. Richardson. Congressman, I guess I just have a 
different way of facing things. If there is a problem, I try to 
fix it. I don't like to say, well, I wasn't here.
    I gave you an answer, and the answer was the facts as I 
know them. I am not trying to defend that. I am not saying it 
was right. But, you know, to say, look, this was on the 
Republican watch, and, you know, there is a lot of incidents on 
the Republican watch, on the Democratic watch, it is a 
pervasive problem--we are talking about 20 years of problems--
you asked me a question, and I am answering it. I am not 
defending anything, but I just have problems with the 
perception that just because it didn't happen on my watch I 
shouldn't try to fix it.
    Mr. Greenwood. Well, perhaps--it is my understanding, Mr. 
Secretary, that--I need to yield back now--but that you are not 
aware of the details of this particular incident, and I asked 
you what information he was obtaining or she was obtaining 
through this illegal wiretap. Would you supply this committee 
with the answer to that question?
    Mr. Richardson. Either myself or the FBI would do that for 
you.
    Mr. Greenwood. I appreciate it. Thank you very much.
    [The following was received for the record:]

    On April 28,1997, a male Los Alamos National Laboratory (LANL) 
employee admitted to rewiring the telephone and recording telephone 
conversations of a female LANL employee while at work. He allegedly had 
an affair with the female employee and recorded the conversations for 
personal reasons.
    On May 7, 1997, the facts of the case were presented to Assistant 
United States Attorney (AUSA) David N. Williams. AUSA Williams declined 
federal prosecution of this matter due to the personal nature of the 
recordings and the fact that the female employee did not work in a 
classified area or have access to classified information at the time 
this incident occurred.

    Mr. Greenwood. Thank you, Mr. Chairman.
    Mr. Upton. The gentleman from Illinois, Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman.
    Senator, first for you, I really appreciated that stack of 
documents on reports. What do we need to do so this report is 
not just another one that gets thrown in the stacks and then 2 
years from now, instead of--what did you have six, six reports, 
or eight? I can't remember how many, but then you have seven or 
nine that you just say, and here is a report----
    Mr. Rudman. There are actually 100.
    Mr. Shimkus. [continuing] from June 1999 listing these 
problems again.
    Mr. Rudman. What has to be done?
    Mr. Shimkus. Yes, sir.
    Mr. Rudman. I would say several things. No. 1, I hope 
whoever is elected President's in the year 2000 selects a 
Secretary of Energy that has some national security background 
and some, hopefully, technical background. I think it is a very 
important place.
    Obviously, Secretary Richardson certainly has substantial 
national security background, and a lot of technical background 
from serving on this committee.
    No. 2, I would hope that the Congress will adopt some sort 
of a major reorganization and streamline this agency.
    No. 3, I hope the oversight, both within the agency and the 
Congress, is vigorous; and I mean vigorous. That is what I 
believe.
    Mr. Shimkus. Thank you, Senator.
    In part of your report, some of the DOE complex would not 
fall within the new entity that you proposed. Do you think that 
those other areas and their security concerns could fall under 
the proposed security czar as the Secretary has mentioned? Or 
how do you--how do we deal with those elements?
    Mr. Rudman. This morning before the Senate, we had quite a 
discussion about that. I don't have a problem at all with some 
modifications of our proposal in terms of staffing of the 
semiautonomous agency. Certainly the Secretary makes a good 
case that security probably belongs up at the top with 
reporting to him, setting policy, with some adjunct to that 
office located in the new Department or agency. I don't have a 
problem with that at all.
    Counterintelligence, I think we still disagree. I think he 
can have counterintelligence policy at the top level. I don't 
disagree with that. You have to have strong counterintelligence 
down within the unit, and I don't think we really disagree with 
that. So there is a lot of agreement here.
    The fundamental disagreement we have seems to be that the 
Secretary is having a hard time accepting an agency or an 
administration within a Department, which is fairly common at 
DOE and at Commerce and a couple of other places, I am told. 
But, you know, you will have to work that out with the 
Secretary.
    I want to point out here that the PFIAB, this is an unusual 
role for the PFIAB. We don't have any great pride of 
authorship. We try to do a public service. It is up to Members 
of Congress, members of the appropriate committees who do this 
all the time with your staffs and the people on the Senate 
side, work with the Secretary and get this done.
    But I surely hope that when you get it done, you don't 
leave it so that some future Secretary or some future Director 
of Security or some future Director of Counterintelligence 
cannot realize what everybody went through in 1998 and 1999 on 
this issue, which, by the way, is what normally happens in 
government. It is the next crisis that people pay attention to.
    Mr. Shimkus. Well, I appreciate those comments, and I think 
that is reiterated in those other reports that you addressed; a 
new administration coming in in 18 months and another new wave.
    I am also really struck by the testimony and your report on 
corporate culture. That is what we are really getting at, for 
lack of a better word. The corporate culture at the Department 
of Energy, especially on the issue of security, seems to be, 
based on a report of--and I want to choose my words carefully--
really a failure, and your report recommends a way to break out 
of that corporate culture. I guess you said it great in your 
opening comments, the old saying we need a new wheel, and I 
would hope that this committee in its oversight, and if we can 
continue working with the Secretary and as we continue to move 
forward, keep this close at hand so that we can help rebuild 
the wheel for national security's sake.
    With that, I will yield back my time.
    Mr. Upton. Thank you.
    Mr. Stearns.
    Mr. Stearns. I thank the chairman.
    In all deference to you, Senator Rudman, I think any CEO of 
any Fortune 500 company could come in and straighten this out 
in 90 days or 6 months. It would not take 3 years to do this.
    Mr. Rudman. Congressman, I am sorry, but I cannot hear. It 
is probably me and not you.
    Mr. Stearns. Okay. I am just saying, Senator Rudman, I 
don't think it would take 3 years to straighten this out, like 
you indicated. I think any CEO of any middle management company 
could do it in 90 days to 6 months. I think the taxpayers just 
won't tolerate a 3-year process on this.
    The Secretary of Energy had indicated earlier that he 
didn't think the Department of Energy, or in this case the 
Department at Los Alamos, was top-heavy. But yesterday's Wall 
Street Journal talked about the bloated bureaucracy, indicating 
that in 1979 there were sort of 4 major departments with 10 
layers and 56 senior executives, and then last year they 
exploded to 18 layers and 143 senior executives.
    I mean, obviously I think most of us think there is a lot 
of top-heavy bureaucracy in that area, and I hope the Secretary 
will look at it more carefully.
    My second concern is, Mr. Secretary, you indicated that you 
talked about--you have ordered a 2-day complete stand-down in 
the labs to renew instructions for staff about security 
practices. Now, obviously, this costs a lot of money to 
taxpayers.
    When we try to understand what this 2-day complete stand-
down is, we understand that basically all it is is employees 
are told to read the Rudman report, to attend to some old 
replayed videos on security in the afternoon. We are told that 
virtually no manager attended these sessions and that employee 
attendance for the afternoon session was roughly 20 percent. I 
think this whole idea of this 2-day complete stand-down doesn't 
seem to be that effective.
    And this is a question for Senator Rudman. Back in April, 
the Secretary of Energy ordered the computer systems at the 
three nuclear weapons labs shut down for 2 weeks in April in 
order to brief all the employees on it and to drive home the 
importance of computer security. In response to the release of 
your report last week, you ordered complete shutdowns, as I 
mentioned earlier, for 2 days. I mean, based upon your report 
and your inspection, do you think there is any value to the 
Secretary's 2-week, so to speak, lab shutdown, and what do you 
think of this whole 2-day complete stand-down he did just 
recently?
    Mr. Rudman. I am not sure I am qualified to answer the 
question.
    Mr. Stearns. Did you find any impact from this great 2-week 
shutdown that he ordered in April? Did you find any segment of 
this influencing the Department at all?
    Mr. Rudman. I am not sure that I can answer that question, 
because I want to be honest and fair here, and I don't want to 
answer about things that I don't know.
    You are asking for a factual answer. I have a lot of 
opinions, but lately I don't have too many facts. You know, 
there is an old saying, I am entitled to my own opinions. I am 
not entitled to my own facts. So I don't think I can answer the 
question.
    But let me just say this to you: I think the Secretary, and 
I know that he will and his staff, now check and see if what 
you just said was accurate. If this stand-down was a mock 
exercise, then there ought to be hell to pay for it, frankly.
    Mr. Stearns. I would think so.
    Mr. Rudman. That is all I would say.
    Mr. Stearns. Did you see any attitude change in the 
employees? I don't think you saw any attitude change as a 
result of this 2 weeks in April, big shutdown to discuss 
security and talk about security stand-down. I mean, you didn't 
see any attitude changes at all?
    Mr. Rudman. Well, to answer your question, we met with a 
number of employees, some of whom are at levels quite high, 
others middle, and I would say that they were very concerned 
about the perception that they were doing a terrible job at 
security; that they had an arrogance and a culture that was 
unacceptable. I think there was a lot of concern about that. I 
think some of that came out of that stand-down.
    Now, I don't know much else about it because we have not 
done a postaudit of what the Secretary has done, so I don't 
want to answer that question because it will be unfair.
    Mr. Stearns. But the fact that no managers attended this 
recent stand-down session and the employee attendance for the 
afternoon session was roughly 20 percent I think says it all.
    Now, Senator Rudman----
    Mr. Richardson. Congressman, am I asked to respond to 
totally unfounded allegations?
    Mr. Stearns. Well, let me just continue.
    Mr. Richardson. On a stand-down that isn't even over and 
you have the results, I find that very curious.
    Mr. Stearns. Mr. Chairman, can I have my time? I would like 
to continue.
    Mr. Richardson. The stand-down is not even over yet, and 
you have its conclusions. I find that strikingly interesting.
    Mr. Stearns. I have a question for Senator Rudman.
    Mr. Upton. The gentleman's time has expired. If we can just 
get an answer, we are going to have enough time for another 
round of questions.
    Mr. Stearns. Okay. Can I ask this last question, Mr. 
Chairman, ask unanimous consent?
    Mr. Upton. He can respond to the question that you asked.
    Mr. Stearns. I mean, this is a question for Senator Rudman.
    Mr. Upton. Go ahead.
    Mr. Stearns. Okay. Mr. Berger, the national security 
advisor, was notified in 1996 about severe security problems in 
the Department of Energy, and the President was notified in 
1997. Shouldn't the administration bear some responsibility and 
criticism for security lapses in regard to this Chinese 
espionage?
    I know on the Senate side you indicated that it was 
Congress' fault, but I mean shouldn't the President take some 
responsibility?
    Mr. Rudman. Well, what I said, I said that there was enough 
fault to go around, including the Congress, including the 
President, several Presidents, and several Secretaries. I got a 
note from someone who didn't like that, but that is the way I 
feel.
    Let me answer your question from my report. If you look at 
page 37 of our report, you will find that we say the following: 
Although the national security advisor was briefed on 
counterintelligence concerns by DOE officials in April 1996--
that is the bottom of page 37--we are not convinced that the 
briefing provided a sufficient basis to require initiation of a 
broad Presidential directive at that time. We are convinced, 
however, that the July 1997 briefing, which we are persuaded 
was much more comprehensive, was sufficient to warrant 
aggressive White House action. We believe that while the 
resulting PDD was developed and issued within the customary 
amount of time, these issues had such national security gravity 
that it should have been handled with more dispatch.
    That is a very direct statement. Told the President of that 
last Monday. That is kind of a good news, bad news story. The 
good news is that the Presidential Decision Directive that they 
issued to the Department of Energy was far-reaching, well 
thought out, and formulated by the FBI, the CIA and the 
Department. That was the good news.
    The bad news is that for a long time nobody paid any 
attention to it.
    Mr. Upton. The gentleman from Maryland, Mr. Ehrlich.
    Mr. Ehrlich. Senator, I love your style.
    Mr. Secretary, I like your style, too. I know you have a 
tough position. I think a lot of us who have been in government 
can have some sympathy with respect to where you are right now.
    Let me ask you, particularly with respect to the issue of 
polygraphs, my friend from North Carolina had begun a line of 
questioning, which I am an attorney, but I am not an expert in 
polygraphs, and I think he was referring to the observation 
made in yesterday's papers that not a single scientist had yet 
been subjected to polygraphs, University of California 
scientists.
    Let me ask you, or whomever is the appropriate person on 
your staff, what the status of the law is with respect to 
polygraph testing.
    Now, you made an earlier statement that the issue of 
probable cause comes into play as to the identities of those 
who are subject to polygraph, and I understand this is a legal 
land mine with all sorts of potential lawsuits and the whole 9 
yards. Can you tell us right now what the present status is 
with respect to the law, how it applies to contractual 
employees, let alone Department employees, and particularly in 
the context of the observation that someone has made that it 
would take the initial round of polygraphs--for those who are 
supposed to take it, it would take 4 years? I know that is a 
wide-ranging, multifaceted question. Let me throw it open to 
you and ask you to respond to all of those questions.
    Mr. Richardson. Congressman, on March 17 of this year, I 
signed notice DOE 472.2, use of polygraph examination. This is 
what it does: It identifies those DOE programs subject to the 
polygraph and the general provisions for conducting polygraph 
exams of DOE Federal employees. Since its issuance, the DOE has 
polygraphed many Federal employees who are covered by the 
notice, as well as some of its contractors who have volunteered 
to be polygraphed.
    We are at the time undertaking a rulemaking process, and I 
haven't waited for the rulemaking process. I have gone forward 
with the policy initiative of doing polygraphs.
    We are undertaking a rulemaking process which will expand 
DOE's counterintelligence polygraph program to include its 
contractor employees as well Federal employees.
    Now, the polygraphs are based on counterintelligence, on 
espionage, on national security grounds. They are carefully 
drawn. They don't involve life-style.
    This is, as you know, a scientifically questioned 
procedure. They can refuse, but they would be removed from 
sensitive work, and there would be no need for probable cause.
    Mr. Ehrlich. Let me interject, if I may, just for a second. 
You had said with respect to contractual employees, at this 
point in time the ones who have volunteered have been 
polygraphed. That leads me to believe that others have not 
volunteered.
    Is it your opinion that you have the authority with respect 
to those contractual employees who have not volunteered that if 
they are asked and decide not to take the polygraph, that they 
can be removed from any sensitive areas?
    Mr. Richardson. Yes, I would have the authority--once I get 
the rulemaking, and we are going to get it, I would have the 
authority to polygraph the contractors, too.
    Mr. Ehrlich. Do you need any statutory changes in the law 
that we need to know about to implement what you believe needs 
to be done with respect to polygraphs generally?
    Mr. Richardson. Congressman, I don't think so, because I 
think this rulemaking is imminent. I think I have the existing 
authority.
    The tough decision was doing polygraphs. Only two other 
agencies do it: the National Security Agency and the CIA.
    Mr. Ehrlich. Thanks. I appreciate it. I yield back.
    Mr. Upton. Thank you.
    Mr. Klink.
    Mr. Klink. Thank you, Mr. Chairman, for allowing me to go 
first. I am going to try to get to the floor.
    First of all, Mr. Secretary, I just want to follow up on 
one question on Mr. Cox's line of questioning. Currently can 
employees still download classified information----
    Mr. Richardson. No.
    Mr. Klink. [continuing] into their own disks? Can they 
download classified information currently onto their own disks, 
and then take it out of the laboratory?
    Mr. Richardson. They cannot take them out of the labs. They 
cannot download on classified disks.
    Mr. Klink. I am sorry. I don't understand. They can what?
    Mr. Richardson. They cannot download on classified disks, 
and they cannot take the disks home.
    Mr. Klink. How are you to enforce them not taking that disk 
home?
    Mr. Richardson. We have a two-person rule. We have what is 
called a two-person rule, and intrusion devices. The two-person 
rule involves two individuals giving approval whenever you 
transfer classified to unclassified.
    Mr. Klink. So how would you be made aware--without giving 
up anything secret, give us an idea of how you would be made 
aware that they were downloading something that was classified.
    Mr. Richardson. I can't do that.
    Mr. Klink. But there is a way?
    Mr. Richardson. There is a way. I think we have to go into 
classified session.
    Mr. Klink. I understand. But you are assuring me that there 
is a way that you would know that something classified was 
being downloaded?
    Mr. Richardson. Yes.
    Mr. Klink. We don't have to go any further than that, Mr. 
Secretary. I appreciate that.
    Senator Rudman, I don't want you to get angry with me with 
this question, but it is something that needs to be asked, and 
I have been struggling with it myself. Please don't be 
insulted. One of the things that has bothered me about the 
panel that you put together to look at these enormous security 
problems that surfaced at the weapons labs was that you 
appointed Dr. Sidney Drell, who I don't know, from the 
University of California, who has the responsibility of those 
same laboratories.
    Now, he may be a wonderful person, may be an honorable 
person, but the question is are we not putting somebody in 
charge of the investigation who is going to be asked to rat out 
his employer to the President of the United States? That is a 
very uncomfortable position to ask Dr. Drell to be in. Can you 
explain that thought process to us?
    Mr. Rudman. Yes. I thought it was, and that is why I told 
Sid Drell, that I thought this service was so important to this 
country that I would like him to resign from his position at 
the University of California before going on this panel. He did 
so.
    Mr. Klink. So you didn't see any problems at all with the--
--
    Mr. Rudman. Dr. Drell is a man of such unquestioned 
integrity, but even with that we felt that staying on the UC 
advisory board would have a terrible appearance, and so we just 
said, Sid, we need you on this panel.
    I had a limited group to pick from. The PFIAB was only 
about 14 people. He is a world-renowned expert and could answer 
questions that no one else could, and he decided, after many 
years, that he would resign.
    I might also point out to you that we had another 
extraordinary person on there named Lou Allen, who you may 
know, former Chief of Staff of the United States Air Force, 
former director of the jet propulsion lab, he is on the Sandia 
board, and thus we felt we could not have him on the panel at 
all. But we did not have a problem with Dr. Drell, but I did 
require that resignation, and he did it.
    Mr. Klink. Thank you. You have cleared that up for us.
    Now, did your panel review the ramifications of shifting 
the control--again, I want to get back to environment, safety 
and health operations. If you are shifting that function away 
from the Office of Environmental Management to this new 
autonomous Nuclear Security Administration, what impact would 
it have on national laboratories and facilities like Oak Ridge 
or Savannah River? Is this something that you looked at?
    Mr. Rudman. Well, I don't think we are doing that. I don't 
think we are doing that at all.
    If you are looking at the chart on page 50, I believe, or 
51, we have everything in place, and we leave the Secretary 
full authority to interface those other parts of his 
Department, such as environment, health, with the new Agency 
for Nuclear Stewardship.
    We put nonproliferation and arms control, fissile material 
and naval reactors in there, and these plants, but those other 
parts of the agency, huge, particularly environmental, we don't 
touch those.
    Mr. Klink. Then who would be responsible for environment, 
safety and health operations at the sites that you have listed?
    Mr. Rudman. Within the Agency for Nuclear Stewardship, it 
would be the Under Secretary, as it should be.
    I mean, you can't have someone--Congressman Klink, let me 
tell you something. You know, from being out in the private 
world that I am in, you know, I see people who head up a 
corporation, and one of their division managers heads up a 
division with 10,000 people in that division. If anything goes 
wrong in that division, whether it is production, cost, 
embezzlement, environment, OSHA, whatever, that person is 
responsible, and they are gone if something happens they should 
have prevented.
    That is what is wrong here; there is nobody responsible. I 
mean, you know, if you want to put the person from the 
environmental part and the health part and all the other parts 
and say, well, they are going to have jurisdiction over that 
part of it, then you are going to go back to where we started.
    Name a strong leader and make that leader responsible. It 
works in the private sector. It will work here. It works at 
NASA. It works as NOAA. It works at DARPA, and it works at NSA.
    Mr. Klink. So, Senator, what you are saying is you are 
setting up a parallel structure, one within DOE and one within 
this autonomous?
    Mr. Rudman. The difference is it is just a--this is a 
division of DOE, if you will, a part of it; like NSA is a part 
of the Department of Defense.
    Obviously, the Secretary will have at his level a much 
bigger environmental organization than they will have, but they 
will have to have people who look after environmental issues.
    Mr. Klink. What if there is a disagreement then between 
what DOE thinks and what this semiautonomous or this autonomous 
group thinks?
    Mr. Rudman. I have been trying to figure that out now for 
72 hours because I like Bill Richardson, and we have talked. We 
have had discussions. But he has a block that he has placed 
someplace that says, I will do this all with some changes, but 
don't call it an agency, don't call it an administration; just 
don't call it anything.
    We believe that to insulate this, not isolate it but to 
insulate this, from the rest of the bureaucracy, which we have 
plenty of evidence has not contributed to the solution but is 
part of the problem, we want this to be called an agency or 
administration responsible directly to him.
    Mr. Klink. If there is a different interpretation between 
what DOE thinks how something should be done or interpreted and 
this autonomous agency thinks something differently, who 
overrides whom?
    Mr. Rudman. The Secretary is in charge. The statutory 
language I read here this morning. There is no question. Let me 
give an example. The National Security Agency located out in 
Maryland, suburban Maryland, an extraordinarily important 
agency, does very important things. They have a Director who 
happens to be a military officer. Anything that the Secretary 
of Defense is unhappy with at NSA, it goes through the chain of 
command; it is fixed. True also of DARPA, true of NOAA and 
Commerce. The Secretary, under our reorganization plan, if 
people will just read it, not just look at the chart, says to 
the Secretary, you are in charge of these weapons programs 
ultimately, and this is the fellow or the woman who is going to 
run them. It is in this box down here. We call it an agency, 
because we are worried about what happens after this current 
group leaves. I am very concerned about that.
    Why? Because we looked at transitions over the last 20 
years, and you wouldn't believe what we found.
    Mr. Klink. Thank you for being so forthright.
    Mr. Secretary, I thank you also.
    Mr. Richardson. Congressman, I hope you will let me use 1 
minute or so to respond to an unsubstantiated charge which 
Congressman Stearns didn't have the courtesy of letting me 
respond to.
    To say that the stand-down of 2 weeks ago that we ordered 
because of the security concerns raised by so many in 
cybersecurity that you raised, and to say that the 2-day stand-
down that we have done, where we are training employees, where 
we are looking at all the cybersecurity changes, where we are 
testing, putting ourselves under scrutiny, is an exercise that 
is not worth doing, and 20 percent of the employees--of the 
managers have not attended is a totally baseless charge.
    It is now in New Mexico 1:30, and I find Congressman 
Stearns' results already tabulated before we have finished the 
exercise rather skillful manipulation.
    So these are necessary exercises. I think that to do a 
stand-down at a national laboratory, a nuclear lab, is one of 
the most drastic actions you can take. You are actually 
stopping work to make sure that counterintelligence security 
are being observed. That is never happened before.
    I did it for 2 weeks. I didn't tell them when I would stop 
it until I was satisfied. I am doing it now for 2 days, after 
reading further concerns that some in the Rudman Commission and 
others in the Congress had. And I may do this again, but to say 
this is not a worthy exercise when you are asking me to test 
our labs, to go out and make them uncomfortable, which this 
does, is something that I am rather flabbergasted at this claim 
that this is an exercise that we shouldn't do.
    Mr. Upton. The time has expired.
    Gentlemen, thank you, again, for coming up. I know that 
members of the committee are going to have additional questions 
later for you. I know that Mr. Klink and I are going to be 
cooperating and having probably additional hearings on this 
topic as well.
    Mr. Markey. Mr. Chairman, I apologize. I was just sitting 
over here. I thought you were going to go a second round.
    Mr. Upton. We are now starting a second round. Actually, I 
yielded to Mr. Klink to start the second round because he has 
an amendment on the floor. I am going to just take a minute or 
2. I am going to go yield to Mr. Dingell. We will come back to 
Mr. Shimkus, and then we will take you.
    In any case, I have one question that remains unanswered, 
as I listened to the many questions that are here now, and that 
is the banning of foreign visitors. We had an amendment on the 
floor a couple of weeks ago offered by our colleague Jim Ryun 
from Kansas. As I recall, the amendment failed, but he did ban 
foreign visitors, with the feeling that the background checks 
were not in place.
    Mr. Secretary--Senator Rudman, as we listened to you, you 
indicate that even if everything was taken into account, the 
GAO reports, your study that you so carefully prepared, it 
would still take a minimum of 3 years before that was going to 
be in place.
    Mr. Rudman. Well, if you look at the number of people there 
are to go through the clearance process, if we believe it 
wasn't done properly before, if you look at the amount of 
polygraphing, and that is a tough issue, I mean, I am going to 
predict there will be lawsuits on this issue, I think you may 
have long delays. You know, it is a very tough issue with 
arguments on both side.
    If you look at the foreign business program, which I 
understand the policy for that is being promulgated, the 
regulations, I think, in the next week or so to formalize it, 
that is what we are told, I mean, that takes time. This is 
nothing you can do overnight.
    I am pleased to see these efforts undergoing, but I will 
guarantee you they won't all be in place when Secretary 
Richardson is off cruising the Caribbean after working on it 
all these years and somebody else will be there. And I don't 
want to sound like a broken record, but, you know, Congressman 
Dingell can tell you better than I can tell you what happened 
in every transition of DOE going back to 1978. We have looked 
at it, and things which were considered so important just 
dropped through the cracks. They just left. Why? Because people 
had other priorities. So I would say that it is going to take 
time.
    Mr. Upton. Shouldn't we have that barn door shut on some of 
these foreign visitors from countries like China and other 
places until these reforms are actually in place and they are 
working?
    Mr. Rudman. I would err on the side of being safe rather 
than the side of being sorry, given the choice, if I were 
running this program.
    Mr. Upton. Thank you.
    Mr. Dingell.
    Mr. Dingell. Thank you, Mr. Chairman.
    Mr. Secretary, if you have a director of a laboratory who 
you think is not doing a good job, or you have an employee at 
the laboratory that you don't think is doing a good job in 
terms of security or something of that sort, what can you do 
about them?
    Mr. Richardson. I can fire them. I can fire a lab director.
    Mr. Dingell. Can you fire the employee of a contractor?
    Mr. Richardson. Yes.
    Mr. Dingell. You can fire an employee of a contractor?
    Mr. Richardson. Yes. I have to consult with the lab 
director, but, in essence, I am going to do that.
    Mr. Dingell. Supposing the lab director doesn't want them 
fired, what then?
    Mr. Richardson. Then I fire the lab director.
    Mr. Dingell. I have always been told that Secretaries 
couldn't address this problem. You are telling me that you can?
    Mr. Richardson. I can, and I will.
    Mr. Dingell. I am going to watch very closely, Mr. 
Secretary, and I know you are not going to disappoint me, 
because we are going to be quoting those remarks.
    Now, Mr. Secretary, how do you expect to control this 
through an independent agency?
    Mr. Richardson. Well, Congressman Dingell, I have indicated 
my preference, which is to have an Under Secretary for Nuclear 
Weapons with a security czar, and a Director of Intelligence on 
these separate tracks.
    Senator Rudman and I differ a little bit about the 
semiautonomous agency. I am willing to work with him and others 
in the Congress, but I think the reorganization I have done 
with the security czar, with this very distinguished general 
that has nuclear weapons background and security background and 
military and management background, I think we can do that 
better.
    Mr. Dingell. All right. Now, did all of the employees of 
the contractors show up to this stand-down that you put on out 
there?
    Mr. Richardson. Well, they are all required to, yes.
    Mr. Dingell. Did they?
    Mr. Richardson. Well, it is not over, Mr. Chairman. It is 
going to be over today at 5 p.m.
    Mr. Dingell. But, beloved friend, I assume that they were 
supposed to show up. Did they? Did they all show up?
    Mr. Richardson. Well----
    Mr. Dingell. Mr. Secretary, they showed or they didn't 
show. Which is the case?
    Mr. Richardson. Well, they showed, but it is not over yet.
    Mr. Dingell. So some of them did not show?
    Mr. Richardson. No, no, I didn't say that.
    Mr. Dingell. Well, did they all show?
    Mr. Richardson. I will know at 5 p.m. Today. This is a very 
serious exercise.
    Mr. Dingell. If they didn't show, what will you tell this 
committee?
    Mr. Richardson. Well, anybody that did not take it 
seriously, I will let you know.
    Mr. Dingell. I am informed that a large number of them did 
not appear. Is that a true statement?
    Mr. Richardson. Well, I don't know how those reports have 
come in when the exercise isn't even over.
    Mr. Dingell. Well, if they haven't showed, they haven't 
showed. They were supposed to, though, were they not?
    Mr. Richardson. Well, I don't have that. That is 
information that I don't have.
    Mr. Dingell. But if they are not showing when you have a 
stand-down, they are not complying with your orders; isn't that 
right?
    Mr. Richardson. That is correct.
    Mr. Dingell. All right. I want a full written report on 
this matter, and I want to have it inserted into the record 
because I think that should be.
    [The following was received for the record:]

    Recent inquiries indicate that participation in the Security 
Immersion Program conducted at the three Nuclear Defense National 
Laboratories on June 21-22 was high. The Sandia National Laboratories 
reports that 93% of their personnel attended and the Los Alamos 
National Laboratory reports a 90% attendance. Those which did not 
attend were on previously scheduled vacations, official travel that 
could not be rescheduled, ill or excused for legitimate personal 
reasons, or in jobs which must be staffed at all times. The Lawrence 
Livermore National Laboratory did not keep centralized attendance 
records for the two days of training, but there is no reason to believe 
their training was not just as well attended.
    On June 24, 1999, Dr. Reis, Assistant Secretary for Defense 
Programs, submitted an information memorandum to the Secretary 
summarizing the two-day security stand-down training. A copy of that 
memorandum follows.
                                 ______
                                 
                               Department of Energy
                                       Washington, DC 20585
                                                      June 24, 1999
MEMORANDUM FOR THE SECRETARY
THROUGH: Ernest J. Moniz, Under Secretary
FROM: Victor H. Reis, Assistant Secretary for Defense Programs
SUBJECT: INFO MEMO: Security Immersion Program

    In response to your June 16 directive, the three Nuclear Defense 
National Laboratories--Los Alamos, Lawrence Livermore, and Sandia--
underwent a two-day Security Immersion Program standdown on June 21-22. 
During the standdown, all normal operations ceased and employees were 
required to participate in mandatory intensive reviews of personal 
responsibility for security, counterintelligence, and cyber-security.
    Following are the missions that were accomplished by the Security 
Immersion Program at the laboratories:

Personal responsibilities were reviewed with all employees to enforce 
        and respect effective counterintelligence, security, and cyber-
        security procedures.
Historical problems related to the laboratories' culture of resistance 
        to effective security and counterintelligence were reviewed 
        with all employees.
The status of implementation of previous counterintelligence, security, 
        and cyber-security improvements underway by prior directives 
        was reviewed with all employees.
Cyber-security actions being taken at the laboratories, especially 
        those associated with personal responsibility for personal 
        computer use and e-mail, were explained to all employees.
The Zero Tolerance Security Policy was fully discussed to assure a 
        complete understanding by all employees.
    Senior management at all laboratories was actively involved in 
planning for the Security Immersion Program at their respective sites 
and participated fully in the program. With very few Director-approved 
exceptions, all employees and contractors, either in person or through 
video links, attended the full two-day sessions with their supervisors 
and managers present and participating. Those employees absent from 
work, off-shift, or not able to attend will be required to attend make-
up sessions.
    In general, contents of the program sessions included:

Laboratory commitments to security
Document control
Export control
Counterintelligence
Cost of espionage
Foreign interactions, visits, assignments, travel
Cyber-security
Information management
    The Security Immersion Program at all three laboratories was 
determined to be a success. All sessions were well attended, with 
active question and answer periods that went beyond scheduled times. 
Interest focused on understanding, guidance, and additional information 
rather than rejection. Feedback from employees and managers has been 
constructive and positive.
    If you have any questions or require further information, I would 
be pleased to meet with you at your convenience.

Attachments
                                 ______
                                 
                Summary of Security Standdown Activities
            los alamos national laboratory--june 21-22, 1999
    Los Alamos National Laboratory completed its two-day security 
standdown at the close of business on Tuesday, June 22, 1999. All 
Laboratory operations, except those necessary to maintain the safety, 
security, and compliance posture of the site, were suspended so that 
University of California and Department of Energy (LAAO) employees and 
subcontractors could devote all of their attention to an intensive 
review of personal responsibility for security, counterintelligence, 
and cybersecurity.
    The two-day event featured an opening presentation by Director John 
Browne with a question and answer session, presentations by guest and 
internal speakers on a variety of security topics, and meetings of line 
organizations led by line managers. The presentations were delivered in 
two large auditoriums (600- and 900-seat capacity) and transmitted live 
on closed-circuit television to a large number of offices and 
conference rooms around the Los Alamos site. In addition, the 
presentations were made available through an internal web server.
    The principal speakers and topics were as follows:

Opening Remarks, John Browne, Director, Los Alamos National Laboratory
Questions and Answers, William Frazer, Interim Chairman, University of 
        California, President's Council
Nuclear Weapons, Stephen Younger, Associate Laboratory Director for 
        Nuclear Weapons
Cybersecurity, Scott Larson, FBI--National Infrastructure Protection 
        Center
Espionage/Information Security, H.T. Hawkins, Director of 
        Nonproliferation and International Security
Strategic Counterintelligence, Rusty Capps, Center for 
        Counterintelligence and Security Studies (former FBI)
Employee Responsibility/Accountability for Security, John Hopson, 
        Senior Technical Staff Member
    The line organization meetings were held at the ``group'' (10-100 
people) level on both Monday and Tuesday for a total of 2\1/2\ hours. 
The purpose of these meetings was to obtain feedback on the 
presentations, develop individual group plans on addressing the five 
points in the Secretary of Energy's Security Immersion Program, and to 
engage employees in addressing any other security issues that might 
need attention. A telephone ``help'' line and e-mail address were 
manned by Laboratory security resource experts during the two-day 
standdown to assist organizations in developing their individual plans. 
A total of 68 inquiries was received and responded to by the expert 
assistance team during the standdown.
    At the end of the second day of the standdown, group leaders met 
with their Division Directors (next line management level) to begin 
rolling up their group-level plans into Division-level plans. Director 
Browne has scheduled a meeting with all Division Director-level 
management for June 24 to roll up Division-level plans to ensure that 
the points in the Secretary's Security Immersion Program have been 
addressed.
    All of the speaker's presentations were videotaped. Because some 
employees and contractors could not attend all of the sessions, makeup 
sessions for viewing the videotapes are being scheduled. Attendance was 
taken during the standdown and will also be recorded for the makeup 
sessions. At this time, we estimate that approximately 80% of the more 
than 10,000 Laboratory employees and subcontractors participated in 
standdown activities. We are collecting attendance information from 
Laboratory organizations to obtain a better estimate of actual 
participation. Makeup sessions will be conducted until all employees 
and contractors have viewed these sessions.
    Questions and feedback from employees both during and subsequent to 
the presentations and meetings has been constructive and positive.
                                 ______
                                 
                                                      June 22, 1999

    Vic--
    We thought you would be interested in LLNL's activities in support 
of the Secretary's two-day Security Immersion Program. I WILL IMPROVE 
ON THIS TOMORROW, BUT I AM SENDING A DRAFT VERSION TONIGHT AS I DON'T 
KNOW WHEN YOU MIGHT NEED THIS. I have also faxed you some supplemental 
material.
    Content: We created and tailored a full day of video presentations 
for all employees to view, which clarified security concerns, 
instructed in LLNL security policies and practices, and educated as to 
outside perceptions of security problems at the weapons labs.
    We followed that with a half-day designed for employees to read and 
discuss specific security-related materials relevant to their workplace 
and activities.
    Lastly, we concluded with a half-day of discussion in the workplace 
between employees and supervisors to apply what they've learned to 
their specific workplace and activities.
    We are now rolling up the output of these discussions to a 
Laboratory-wide compilation of issues, resolutions and lessons learned.
    Process: Two special meetings were held on Thursday and Friday of 
last week, with all senior managers to explain and design the program.
    With very few Director-approved exceptions, all work was stopped at 
the Laboratory. All employees were required to participate in the full 
two-days at their normal workplace with their supervisors and managers 
present and participating.
    Phone conversations between the Deputy Director for Operations and 
each senior manager (26) or principal assistant were held Tuesday 
morning to assess progress and ensure successful implementation.
    Videos were rebroadcast continuously during the immersion program 
for make-up and off-shift viewers. Video tapes will be provided to 
employees who were unable to view them during the immersion program
    Preliminary results: Preliminary feedback has been positive. Rusty 
Capps with his espionage talk captivated viewers and set the stage for 
stimulating participation in the remaining day and a half.
    Phone calls to our hot-line indicated high employee interest--
mostly seeking answers to questions or additional guidance to material 
or information.
    I hope this is of interest and assistance to you. As our rollup is 
completed, we will provide additional results and conclusions. This 
will take a few days. If you need any additional information or help, 
please let me know.
                                                                Bob
                                 ______
                                 
                    llnl security immersion program
Monday, June 21, 1999
8:30 am Director Tarter address to all Laboratory employees
    Bruce discussed the importance of, and our commitment to security. 
He explained the reasons for and the details of the Secretary's 
Security Immersion Program. He provided a hot-line number for employees 
to call if they had input or questions.
    Bruce then introduced the next speaker.
    (This was conducted live in the Laboratory auditorium with 
200 people present. It was televised live to all Laboratory 
employees. With a few director-approved exceptions, all work was 
stopped and all employees watched the broadcast from their workplaces.)
9:00 am to 12:00 pm The High Cost of Espionage
    Presentation by Rusty Capps, former FBI agent, to all Laboratory 
employees.
    (This hour presentation was conducted live in the auditorium to 
200 employees and broadcast live to all employees over Lab-
wide television. With a few Director-approved exceptions, all employees 
viewed the presentation from their workplaces.)
1:00 pm Current LLNL Practices, Foreign Visits and Assignments and 
        Foreign Travel
    Presentation by Bill Dunlop, Program Leader for Proliferation 
Prevention and Arms Control Program at LLNL to all Laboratory 
employees.
    (This is a 30-minute video recorded specifically for this immersion 
program. It was broadcast on Lab-wide television. With a few Director-
approved exceptions, all employees viewed the video from their 
workplaces.)
1:30 pm Export Control at LLNL
    Presentation by Bill Bollinger, LLNL Classification and Export 
Control Advisor, to all laboratory employees.
    (This is a 30-minute video recorded specifically for this immersion 
program. It was broadcast on Lab-wide television. With a few Director-
approved exceptions, all employees viewed the video from their 
workplaces.)
2:15 pm Cyber Security at LLNL
    Presentation by Joe Brandt, Principal Deputy Associate Director for 
Compensation Directorate and Information Security Program Leader, 
Office of the Chief Information Officer.
    (This was a 45-minute video presentation recorded specifically for 
this immersion program and broadcast via Lab-wide television to all 
employees. With a few Director-approved exceptions, all employees 
viewed this presentation from their workplaces.)
3:15 pm Laboratory Directors' Testimony
    (This one and one-half hour video is a compilation of the recent 
testimony on security by the three nuclear weapons Laboratory 
Directors. This tape was created specifically for this immersion 
program and televised to all employees via lab-wide television. With a 
few Director-approved exceptions, all employees viewed the video from 
their workplaces.)
4:45 pm Security-related TV Clips
    (This one hour video was a compendium of various security-related 
video clips from various recent television news programs. It was 
created specifically for this immersion program and broadcast on Lab-
wide television.)
Tuesday, June 22, 1999
    8:00 am to 12:00 n--All employees gathered in their work areas and 
read and discussed selected materials from the following:

1) US. National Security and Military/Commercial Concerns with the 
        Peoples Republic of China
2) Report of President's Foreign Intelligence Advisory Board (PFIAB)
3) Director of Central Intelligence George J. Tenet's April 21, 1999, 
        statement on the implications of China's acquisition of U.S. 
        nuclear weapons information
4) Report of the Secretary of Energy Advisory Board Working Group on 
        Foreign Visits and Assignments (June 8, 1999)
5) and other related materials, as appropriate
    1:00 pm to 5:00 pm--Employees gathered in their workplaces and 
discussed with supervisors the application of the information viewed 
and read, to their group activities and their workplaces. This 
information will then be rolled up and aggregated at increasing levels 
until a full Laboratory roll-up is accomplished by the Deputy Director 
for Operations. This will then be used for further Lab-wide 
communication and actions concerning security. Employees and 
supervisors will also immediately implement local security improvement 
measures identified in the two-day program.
    The classes listed below were optional for those departments who 
believe these topics are relevant to work-specific projects being 
performed by employees in their organization:

        UNCLASSIFIED Presentations for Security Immersion Program
------------------------------------------------------------------------
              Time                       Topic              Speaker
------------------------------------------------------------------------
08:30-09:15 a.m.................  Document Control..  Maggie Lucero
09:30-10:15 a.m.................  Export Control....  Chad Twitchell
10:30-11:15 a.m.................  Counterintelligenc  John Kirby
                                   e.
12:30-01:15 p.m.................  Foreign             Melanie Florez
                                   interactions.
01:30-02:15 p.m.................  Cyber Security....  Sharon Walsh
02:30-03:15 p.m.................  Information         Joe Morreale
                                   Management.
------------------------------------------------------------------------

    Attendance at these meetings was high both in the Schiff Auditorium 
and in the video linked areas. Question and answer periods were active 
with questions going beyond the scheduled time. Videotapes are being 
made available to all Sandia organizations for make-up sessions and for 
those who were double scheduled and wanted to review the session that 
they missed.
General Observations
    The staff at Sandia took the request to focus on security during 
these two days with an intensity that was surprising and pleasing even 
to those of us who knew that they would do a good job. Questions 
concerning zero tolerance and polygraphs were related to understanding 
rather than rejection of the concept. A great deal of this success is 
due to the planning sessions that Paul Robinson and the Laboratory Vice 
presidents conducted on June 17 and 18 and the training materials 
prepared by Lynn Jones and staff over the weekend. This material gave 
each organization a wide range of materials to cascade the initial 
Monday meetings down to the staff.
 Security Immersion Meetings at Sandia National Laboratories--June 21-
                                22, 1999
                         monday, june 21, 1999
    08:00-09:30--Half of managers attended an address by Paul Robinson, 
labs Director and a review of core presentation by Vice President Lynn 
Jones. Both speakers emphasized the five points in Secretary 
Richardson's request and personalized these points to the Laboratories.
    09:30-11:30--Second half of management staff attended the above 
presentation. The above were video taped for use in required make-up 
for employees and videolinked to our California site.
    Vice Presidents met with their center and department groups for the 
remainder of Monday morning. The intent of these meetings was to 
cascade the messages presented by Paul Robinson and Lynn Jones to each 
employee. The challenges presented to all Sandians are to emphasize 
security responsibilities and think of ways to improve security in our 
operation. A quick estimate of the number of these cascade meetings is 
60 center-level meetings plus 1 per department (approximately 600 total 
meetings). Many of these were multiple session and are continuing on 
Monday afternoon.
    Source material was provided to every Sandian via the web site (see 
attached Security Immersion Program Official Use Only page). Sandians 
were automatically linked to this page when they logged onto the 
internal web page on Monday, June 21, 1999.
                         tuesday, june 22, 1999
    On June 22, these cascade meetings continued plus special meetings 
for those holding SCI clearances were conducted. These meetings 
progressed far beyond information gathering into discussions of 
operation in specific organizations and how to improve on a detailed 
level. Direct involvement of the Vice Presidents was clearly a plus for 
the staff. This involvement ranged from teaching classes to joining 
classes to answer questions.
    General training sessions were held in our largest auditorium and 
were video broadcast to many smaller meeting rooms. These special 
sessions were conducted every hour from 8:30 a.m. to 3:30 p.m. Each 
session was planned for a 30-minute presentation with a 15-minute Q&A 
period following.

    Mr. Dingell. Now, the Cox report stated that the labs were 
penetrated by spies. Is that true? And he stated--it said today 
by spies. Is that true?
    Mr. Richardson. Mr. Chairman, there are three cases: in the 
1970's, a neutron bomb case; the Tiger Trap case in 1984/1985 
and from 1984 to 1988, we have alleged espionage. Right now, in 
the present case involving the suspect from Los Alamos there is 
no law enforcement case for espionage.
    Mr. Dingell. Has anyone been punished for what happened at 
Los Alamos?
    Mr. Richardson. I will, in 2 weeks, be issuing a report on 
who has been punished, and that will be based on an inspector 
general report, and individuals at Los Alamos and DOE will be 
punished or disciplined.
    Mr. Dingell. Will anybody be punished?
    Mr. Richardson. Yes.
    Mr. Dingell. They will? And this report will be forwarded, 
I know, Mr. Secretary, to the committee?
    Mr. Richardson. Yes, it will.
    Mr. Dingell. Very good. So that we may be informed of the 
actions which will be taken.
    Under your proposal, who would have--Senator, under your 
proposal, who would administer the authority to impose civil 
penalties on contractors for violation of health and safety 
rules which the Congress granted DOE--when it renewed the 
Price-Anderson Act in 1987?
    Mr. Rudman. Congressman Dingell, it would be the Secretary. 
I want to make it very clear again that this is a semi, and I 
emphasize the word semi, autonomous agency. There are two 
models in the report. One is a NASA-type model, which is 
totally autonomous. This is an agency reporting to the 
Secretary with his final control and his ability to do anything 
he wishes in terms of those issues.
    Those issues particularly reside in the Secretary's office 
and in his other departments. He has full authority to impose 
whatever he wishes on this independent, semiautonomous group.
    Mr. Dingell. Will this require renegotiation of the 
contract with the contractors?
    Mr. Rudman. We would not think so.
    Mr. Dingell. Mr. Secretary, do you know this?
    Mr. Richardson. There are environmental and safety and 
health provisions in the contract. I don't think you need to 
renegotiate.
    Mr. Dingell. You don't think you have to renegotiate them 
so you have full control over the behavior of the contractor, 
including hiring and firing, things of that kind?
    Mr. Richardson. Any----
    Mr. Dingell. Would you request your counsel to give us an 
opinion on that particular matter?
    Mr. Richardson. Yes.
    [The following was received for the record:]

    The Department's management and operating (M&O) contract is a 
contract characterized both by its purpose (i.e., the operation, 
maintenance, or support of Government-owned or controlled research, 
development, special production or testing facilities) and the special 
relationship it creates between the Government and the contractor. See 
Federal Acquisition Regulation (FAR) 17.601 and 17.604, One of the 
indicia of an M&O contract is the close relationship with the 
contractor and its personnel in a number of important areas, including 
safety, security, cost control and site conditions. FAR 17.604 (b). 
Through the uniquely structured M&O contract vehicle, the Department 
retains a large measure of control over the contractor's internal 
management activities, generally beyond that found in other government 
contracts. Through the M&O contract, the Department also possesses a 
number of remedies in the event of deficient performance.
    Notwithstanding the close relationship and control established 
under the M&O contract, however, the M&O contract is not considered to 
be an employment contract or personal services contract with the 
contractor and its employees. As a result, the Department does not have 
full control over all aspects of the behavior of the contractor, 
including the hiring and firing of contractor employees, and it would 
be necessary to renegotiate the M&O contracts should the Department (or 
Congress) determine that the Secretary should possess complete control.
    Using the LANL contract for illustrative purposes (Contract No. W-
7405-ENG-36, effective October 1, 1997), the following is a general 
description of some of the contract's principal control measures and 
remedies available to improve performance. The discussion below also 
touches upon some of the legal issues, risks and liabilities which 
should be considered.
Personnel
    The University of California is charged under the contract with 
providing the necessary intellectual leadership and management 
expertise to manage, operate and staff the Los Alamos National 
Laboratory. While the contractor has the overall responsibility for 
hiring the personnel necessary to perform the contract, the contract 
addresses a number of specific personnel-related matters. For example, 
the selection of ``Key Personnel'' (the Laboratory Director and Deputy 
Laboratory Director(s)) must be approved by the DOE Contracting Officer 
and cannot be removed or reassigned (except for disciplinary reasons) 
without prior consultation with the Contracting Officer (clause 5.8). 
However, subject to the Key Personnel clause, the University retains 
the authority to terminate senior management from University employment 
(Appendix A, Section III (f)(4)). Additionally, in Clause 6.4, the 
Laboratory Director is to be a competent full-time resident supervisory 
representative of the contractor ``satisfactory to the Contracting 
Officer'' in charge of all work under the contract, the contractor is 
made responsible for maintaining satisfactory standards of employee 
competency, conduct, and integrity; for taking disciplinary action with 
respect to its employees as may be necessary, and for establishing 
standards and procedures, to be approved by the Contracting Officer, as 
are necessary to effectively implement DOE's regulations relating to 
contractor employee standards of conduct, acceptance of gratuities, and 
outside employment.
    The contract also contains Appendix A, ``Personnel Costs and 
Related Expenses, which is an advance understanding between the 
University and the Department on allowable personnel costs and related 
terms and expenses. This Appendix addresses, among other things, 
compensation standards, vacation time, training, travel and so forth. 
Appendix A also establishes that the evaluation of the contractor's 
performance in science and technology and operation and administration 
is the basis for determining the contractor's senior management's 
salary increases ``authorization multiplier.'' (Personnel Appendix A, 
Section III (f)(8)).
    Thus, while in general the Department cannot contractually direct 
the University's hiring and firing decisions, DOE has a wide range of 
controls and review functions in the M&O contract to assure that highly 
qualified individuals are employed by the University of California in 
the performance of the contract and that they perform well in the 
operation of the Laboratory. As a result, DOE may exert substantial 
influence over the selection, performance appraisal and retention of 
contractor employees, particularly those in senior management 
positions.
    The oversight controls and mechanisms discussed provide the 
Department with the ability to direct, evaluate and monitor contract 
performance, but at the same time to avoid creating what might be 
viewed as an ``agency'' or ``employer-employee'' relationship which 
could arise if the Department had full control over the behavior of the 
contractor, including all hiring and firing. If DOE had direct control 
over employees of the University of California, such control might 
raise legal questions by giving the appearance that DOE was hiring a 
personal services contractor rather than an independent management and 
operating contractor. For example, the Federal Acquisition Regulation 
provides that obtaining personal services by contract, rather than 
direct hire, circumvents civil service laws unless Congress has 
specifically authorized acquisition of the services by contract (FAR 
37.104). The Federal Acquisition Regulation describes the 
characteristics of an employee-employer relationship as including 
situations where contractor personnel are subject to the relatively 
continuous supervision and control of a Government officer or employee. 
Thus, in view of the fact that the University of California is intended 
to have contractual responsibility for managing and operating the Los 
Alamos National Laboratory and is not intended to be essentially a 
personal services contractor, it would not be appropriate for DOE to 
exercise relatively continuous supervision and control over individual 
contractor employees.
    Other legal issues could also arise in the event full control over 
laboratory employees was obtained such that an employer-employee 
relationship is created and the employees were considered to be agents 
of the Government. These issues include whether the Government could be 
held directly liable for the tortious conduct of the employees, whether 
the contractor would enjoy the Government's sovereign immunity from 
state taxation, and whether subcontractors could assert claims directly 
against the Government.
Security
    Through a number of contract clauses, DOE has the authority to 
require the contractor to fulfill extensive responsibilities in the 
security area. For example, the contractor is required to establish 
appropriate controls for nuclear materials pursuant to DOE directives 
(Clause 10.1), safeguard classified information and special nuclear 
material and protect against sabotage and espionage, and conform to all 
DOE security regulations and requirements (Clause 10.3), ensure that 
all information and equipment generated under the contract in a 
potentially classified subject area is reviewed by an appropriate 
classifier in accordance with classification regulations or directives 
(Clause 10.4), protect certain unclassified controlled information in 
accordance with DOE regulations and directives (Clause 10.5), and 
protect DOE programs, technology, unclassified sensitive information, 
classified matters, etc. from foreign intelligence threats (Clause 
10.6). Among the powers and authorities DOE has in the security area is 
the right to determine whether an authorization of access to classified 
information or special nuclear material shall be denied to or revoked 
for an individual. Possible grounds for denial or revocation of an 
access authorization include failure to protect classified matter or 
disclosure of classified information to a person unauthorized to 
receive such information (10 C.F.R. Ch. 111, section 710.8(g)(1999)).
Environment, Safety and Health
    The general environment, safety and health clause in the contract 
provides broad general requirements for the contractor and rights for 
DOE to be closely involved in assuring that the contractor properly 
performs its responsibilities in the areas of environmental, safety and 
health protection (Clause 6.7). For example, the contractor is required 
to manage and perform work in accordance with a documented Safety 
Management System, and the contractor must submit to the Contracting 
Officer documentation of its system for review and approval. The 
contractor must also comply with all applicable laws, regulations, and 
DOE directives; and if, at any time, the contractor's action or failure 
to act cause substantial harm or an imminent danger to the environment, 
or health and safety of employees or the public, the Contracting 
Officer may issue an order stopping work in whole or in part.
Performance Appraisal
    As a performance-based management contract, the contract provides 
an extensive system for appraisal and evaluation of the contractor's 
performance in two overarching areas: (a) Science and Technology, and 
(b) Operations and Administrative performance (Clause 2.6; Appendix F). 
Detailed performance objectives, criteria and measures are provided in 
areas which include, among others, safeguards and security, and 
environment, safety and health, and financial management. The amount of 
the program performance fee awarded to the contractor depends upon the 
ratings the contractor is given in the performance areas described 
(Clause 5.3).
Termination
    Under the Termination clause in the contract (Clause 13.2), the 
Contracting Officer may terminate the contract for certain specified 
reasons (e.g., certain illegal activities), or ``whenever, for any 
reason, the Contracting Officer shall determine any such termination is 
for the best interest of the Government.'' The right to terminate a 
contract for convenience ``for the best interest of the Government'' 
has been given great deference and generally will not be disturbed, 
absent a finding of bad faith or abuse of discretion by the Government. 
Krygoski Construction Company, Inc. v. United States, 94 F.3rd 1537 
(Fed. Cir. 1996).
Conclusion
    It is clear that DOE has broad authority to set standards and 
impose requirements over many areas of contractor performance in the 
operation of the Los Alamos National Laboratory. And, although the M&O 
contract is not an employment or personal services contract providing 
DOE with full control over contractor behavior, including the ability 
to directly fire and hire all individual contractor employees, DOE does 
have numerous mechanisms available, such as the right to approve a 
satisfactory laboratory director, the right to evaluate contractor 
performance and thus affect the contractor's fee, and ultimately the 
right to terminate the contract, so that it can effectively assure that 
the work is being performed in accordance with the contract's 
performance standards.

    Mr. Dingell. I notice my time has expired, but one quick 
question, Senator. You talked about the NRO. That is an agency 
that built a building without ever telling the Congress?
    Mr. Rudman. As a matter of fact, they built the building 
and told the Congress, but everybody ignored it.
    Mr. Dingell. Is that what happened?
    Mr. Rudman. That is exactly what happened. That is not what 
the press said, but that is what happened.
    But let me say that they have a lovely headquarters out 
there, which I was here when we appropriated the money for 
that. I was on the Intelligence Committee, and it is rather 
palatial. I think some people up here are a bit jealous of it, 
but the fact is that the work that they do is extraordinary, 
and I commend it to this committee to look at.
    Mr. Dingell. And they spent money, I gather, very 
genteelly.
    Mr. Rudman. They spend a lot of money, but we tend to 
appropriate it for them up here.
    Mr. Dingell. Thank you, Mr. Chairman.
    Mr. Upton. The building is like the B-2 bomber, you weren't 
supposed to see it.
    Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman.
    Mr. Secretary, you probably thought you were getting a 
break coming to the DOE versus the U.N. It seems like the 
firing is a little more intense on this end.
    Senator, I am a former Army officer, and I think there is 
another agency that holds people accountable for what the unit 
does or fails to do, and that is the military. That is why I 
think we see a proliferation of retired generals coming into 
the Federal bureaucracy to help us rein in and keep people 
accountable, and I, as a veteran and as a Reservist, I applaud 
that portion of our Federal Government that still holds a line 
on some accountability.
    I want to kind of follow up on our last line of 
conversation to try to understand, Senator, the line you drew 
between the facilities and functions that would be transferred 
to the new semiautonomous, independent organizations and those 
that would remain in DOE.
    Your report recommends transferring three labs, Lawrence 
Livermore, Los Alamos and DN; four facilities, Kansas City, 
Pantex, Y-12 and the Nevada test site.
    These three labs each conduct a significant amount of 
nonweapons work, so that the basic question is: What do we do 
with those parts of those labs that are not doing weapons-type 
research? Do we keep them there? Do we move them? Do we move 
the personnel? What would you do given that problem?
    Mr. Rudman. Congressman, your question is addressed in some 
detail in our written report.
    Let me point out to you that the reason that we believe 
that even though we gave you two alternatives, that the 
alternative keeping it under the Secretary of Energy's control, 
even though it is a semiautonomous agency, is for that very 
reason. You will note on page 50 of our report, we show the 
Assistant Secretary for Science and Energy who has a direct 
line going into the Deputy Director of Defense programs. You 
would still have the authority going up to the Deputy Director 
and all the way up, if you will, to the Under Secretary, but we 
believe that all of that science should be kept at the 
Department of Energy.
    It should be done at those laboratories, and the Secretary 
has enormous power under their enabling statute to do anything 
he wishes to effectuate that. What we don't want to happen is 
to have all of these other folks who have some lines of 
authority over this weapons agency. That is where we think the 
trouble starts.
    It also starts in the field operations, which we strongly 
say ought to be stripped away and then put back in place to the 
extent that they are needed.
    Mr. Shimkus. Am I correct in stating that at Savannah there 
is some weapons research done there also; do you know?
    Mr. Rudman. Yes. That is production of tritium, right; I 
knew that, right.
    Mr. Shimkus. So I guess the same--I guess the same follow-
up question continues with what do we do--Savannah is not 
really specifically mentioned in the report, as far as I have 
reviewed. How do we respond with Savannah?
    Mr. Rudman. The Secretary can correct me on this because he 
has more knowledge of it, but my understanding is that that is 
in the process of a very careful long-term shutdown, if I am 
not mistaken.
    Mr. Richardson. Savannah deals with tritium. Savannah has 
many components. We are not shutting Savannah down.
    Mr. Rudman. Part of it is being shut down, correct?
    Mr. Richardson. The tritium extraction facility is going to 
be built there.
    Now, I guess----
    Mr. Shimkus. You see, the problem is when we are trying to 
merge and have a separate entity, and I kind of tend to agree 
with the Senator on the report, the question is these 
facilities that have other activities that are civilian-
related, how do you break them apart? I don't know if we have 
thought that through.
    Mr. Rudman. We don't break them apart. We say there are 
certain of these facilities which should not be a part of this 
agency for nuclear stewardship. We say that the problem now is 
that you have got too much in too many places.
    Look, I showed this organization to the CEO of I guess it 
is the ninth largest U.S. Corporation. He got hysterical 
looking at it. He said it is impossible to run anything like 
this. He says what you would do is you would break it into 
smaller units. That was after we had done our report.
    I mean, I agree with some of these comments. You bring in a 
ruthless CEO, and let me tell you, it would be yes, sir, and 
no, sir, march off to the right. The trouble in the body 
politic is we don't operate that way, although I think the 
Secretary may find in the coming 18 months of his term that he 
may have to get very tough with people, because my sense is 
there are a lot of folks out there who are still resisting in 
spite of every good effort.
    Mr. Shimkus. I think the Secretary can take support from 
the fact that there are a lot of Members of Congress who would 
support activities that the Secretary does in moving 
aggressively.
    I yield back my time.
    Mr. Upton. Thank you.
    The gentleman from Massachusetts, Mr. Markey.
    Mr. Markey. Thank you, Mr. Chairman, very much.
    Mr. Secretary, as a long-time veteran of this committee, 
you remember, I am sure, back in the 1980's, the battle days 
when DOE production was everything, and there was a severe lack 
of environmental compliance, health compliance, safety 
compliance, dozens of hearings held in this committee trying to 
get the Department of Energy to measure up on issues that were 
clearly of great importance to American families, American 
workers and the environment in our country.
    At that time, the defense nuclear complex, this thing that 
coexists with DOE, the same operators who created the massive 
contamination of these facilities, was in charge of the 
environment, of the safety, of the health function.
    Now, in 1989, after countless investigations and GAO 
reports, the environment, health and safety function was given 
to the Office of Environmental Management. Will you oppose any 
legislative effort, such as the Kyl amendment in the Senate, 
that effectively puts the environment, safety and health 
function back in the defense nuclear complex, whether in the 
form of a semiautonomous entity or otherwise?
    Mr. Richardson. Yes. Although Senator Kyl has changed his 
amendment several times, I can't keep track of it, but, yes, I 
think that environment, health, safety oversight should be in a 
separate entity that reports directly to me, and I think the 
nuclear weapons component should abide with safety and health 
provisions and should not be immune from being scrutinized in 
these areas.
    Mr. Markey. Senator Rudman, no one holds you in higher 
regard than I do, and you have done an excellent job in 
diagnosing the problem here. We just want to make sure that we 
make the referral to the right doctor for each one of the 
problems. The health, the safety, and environmental issues have 
always been very troublesome in terms of the handling by the 
defense establishment.
    Would you support the Kyl amendment?
    Mr. Rudman. Oh, absolutely not. I told him that. In fact, 
they have withdrawn it. They have essentially adopted our 
formulation. And we were very careful because, you know, we 
heard a lot of testimony from a lot of people. We looked at all 
of the reports from this committee. We had--how many reports 
from this committee did we look at? Probably 30, 35 reports 
over the last 20 years. We got them all from both minority and 
majority staff.
    We do not believe that any--that the environment, the 
health issues should be stripped out from where they are and 
put down within this unit. We believe they ought to stay where 
they ought to stay, with the Secretary. So we didn't do that, 
and I would not support that kind of a change, because I know 
what we all went through back during the 1980's.
    Mr. Markey. Now, do you think that it is impossible to 
construct an entity such as the Secretary is recommending, that 
is within the existing structure of DOE, to solve these 
problems, that would satisfy the concerns which your report has 
identified? Do you think he just can't accomplish this under 
any circumstances, or are you just kind of trying to propose 
the perfect, but the good could still be accomplished under the 
Secretary's formulation?
    Mr. Rudman. It would certainly be an improvement, but let 
me just make an observation, Congressman Markey.
    The only essential difference, if you take the boxes of the 
staff offices and say to the Secretary, what don't you think 
ought to be there, and say, okay, we will move that around, we 
won't have an IG, we won't have a general counsel, we will move 
that back up, we will have a representative there, you get that 
all done, the only lasting--the only difference that is left 
between our proposal and his proposal is whether or not you 
refer to this in the statute as the Agency for Nuclear 
Stewardship or the Nuclear Stewardship Administration, directly 
responsible to the Secretary. That is the only difference. 
There is no difference.
    I have been trying to figure out now for going on 7 hours--
and I am usually not that slow, but I am pretty slow today.
    Mr. Markey. You went to an excellent law school, Senator. I 
just want to compliment you.
    Mr. Rudman. That is right.
    I can't figure out for the life of me if everybody is 
willing to say to the Secretary, we will put the boxes the way 
you want them, this persons is directly responsible to you and 
all of that, he has some sort of a block against the word 
``agency'' or ``administration,'' and maybe you can help get 
him over that.
    Mr. Markey. Mr. Secretary, is there a bridgeable gulf? Is 
there another word in the thesaurus that we could look to that 
could solve the problem?
    The Senator says that there really is not a substantive 
difference of opinion here; that it is now on the nomenclature 
that is dividing you.
    Mr. Richardson. I think that we are--hopefully we will 
merge these differences.
    Congressman, I also want to preserve the rights in the 
House of my old committee, your oversight responsibilities, 
that you are now conducting. So I want to put that on the 
table.
    No. 2, I think it is important that we do this right 
because we are going to codify it, and we don't want to create 
a monster that doesn't have proper oversight by anybody else, 
as imperfect as it may be.
    I will repeat again, I don't think Senator Rudman and I are 
very far apart. I worry about some of the drafting that is 
going on in the other body that has all the right rhetoric, but 
if you look at the boxes that Senator Rudman and I can agree 
on, that there are some that want to, for instance, deal with 
safety and health separately and not make them a part of the 
charter of this new entity.
    I don't think it is right. I think everybody should be 
accountable for safety and health and security, and I think my 
plan achieves this. I think we are coming closer as the hours 
go by.
    Mr. Markey. Senator Rudman and I are both alumni of Boston 
College Law School, but you and I are both alumni of this 
committee, and I am very sensitive to your concern about our 
committee's jurisdiction.
    At the bottom of all of this is really a problem of 
contractors and how we make them accountable, and if we move 
the people who used to be responsible for $800 toilet seats and 
now put them in charge of this, and we take the people who used 
to be in charge of our secrets at the labs and move them over 
here to the toilet seat area, that doesn't really do anything.
    Moving around the boxes isn't going to solve this. 
Accountability of contractors, no matter how we design it at 
the end of the day, is really going to determine whether this 
is a success or not. And I think that our committee's record in 
identifying and highlighting these issues over the years is 
unsurpassed in Congress.
    As a matter of fact, I think you largely have had to rely 
upon the reports of this committee, and I think in the same way 
that while the Banking Committee might have had their scandals 
with the S&L industry, we never had the counterpart in the 
securities industry. The same thing can be said here, and I 
would just hope that there would be some respectful attention 
paid to the legitimate concerns raised by the Secretary.
    Mr. Rudman. I just want to respond, if I may, Mr. Chairman, 
in 30 seconds.
    Mr. Upton. Go ahead.
    Mr. Rudman. I think that it is essential that this be done 
carefully, methodically. I don't know what the Senate will do. 
It may pass something in the next several days. I think this 
ought to be looked at very carefully, but I just want you to 
understand where I am coming from, Congressman Markey. I said 
it before you got here. I am deeply concerned about what 
happens after Secretary Richardson is no longer Secretary of 
Energy, and his top people are now gone, and somebody comes in 
with different priorities. That is why we think the 
semiautonomous agency or administration, structured with the 
right people, stands the greatest chance of maintaining 
accountability.
    This is all about accountability. That is what it is really 
about, and I think you have said that.
    Mr. Markey. Thank you, Senator, very much.
    Mr. Upton. The gentleman from Texas, Mr. Barton.
    Mr. Barton. Thank you, Chairman Upton.
    I want to first welcome Congressman Markey's better half, 
Dr. Susan Markey, in the hearing room. She was smiling broadly 
as you spoke, nodding her head aggressively on occasion. So we 
are glad to have her here.
    I have just three questions, and I know you have got to 
catch a plane, and I know Secretary Richardson has a busy 
schedule.
    My first question is to you, Mr. Secretary. When I gave my 
opening statement, I said that we ought to terminate the 
contract with the University of California immediately, if 
possible. Do you see any cultural conflicts in having an 
academic institution, which tends to seek openness and dialog, 
in charge of a weapons complex where a paramount concern is 
just the opposite, which is security and classified 
information?
    Mr. Richardson. Congressman, I don't see a conflict. I 
think whoever your contractor might be, if you have strong 
stipulations on security and counterintelligence, as there 
should be--I think that the labs have benefited in their 
science, in their research, from being associated with world-
class institutions like the university. I am talking about the 
science side. We have labs associated with MIT, with Princeton, 
with the University of Chicago. That is good for science. That 
is good for us.
    We have some relationships with your universities that are 
good for the Department of Energy.
    Mr. Barton. Why hasn't the University of California then, 
if it is good for the weapons complex, why haven't they 
aggressively acted on the recommendations that you have made 
and other Secretaries before you have made? Why does it take a 
congressional oversight hearing and a national scandal to get 
their attention?
    I could point out that when Chairman Dingell was chairman 
of the full committee, his oversight subcommittee uncovered a 
number of scandals in the contract that the University of 
California was then administering. So how many scandals and how 
long does it take, Mr. Secretary?
    Mr. Richardson. Well, there shouldn't be any more. There 
shouldn't be any more.
    Mr. Barton. Well, I think we agree on that.
    Mr. Richardson. There should be statutory language to 
prevent ingrained problems. We are moving in that direction, 
but I am not going to blame the University of California for 
all the security lapses at the lab.
    Mr. Barton. Well, they are the contractor.
    Mr. Richardson. Well, it is----
    Mr. Barton. You either blame the contractor, or you blame 
people above them in your chain of command. There has to be 
accountability.
    Mr. Richardson. I am blaming the people above them. I am 
blaming the Department of Energy. I am blaming past White 
Houses. We could have a collective responsibility. You can't 
just blame the contractor. We change the culture of the lab 
employees.
    Mr. Barton. Well, I think you can hold them accountable.
    Mr. Richardson. I am blaming the Congress, too. You know, 
we shouldn't have--my staff is yelling no.
    Mr. Barton. No, that is okay. I won't disassociate myself 
with that.
    Mr. Richardson. We briefed a lot of committees about these 
problems, and there were times when my counterintelligence 
chief didn't get the funding that he requested from the 
Congress.
    Mr. Barton. I have got two more questions. I know that you 
can filibuster with the best in the other body when you want 
to.
    Senator Rudman's report has a part of it in the section 
entitled Trouble Ahead, where it talks about that foreign 
nationals were able to have remote dial-up access to 
unclassified networks without any monitoring by the lab. Is 
that true, yes or no?
    Mr. Richardson. There will be monitoring soon.
    Mr. Barton. No, it is not true. So Senator Rudman's report 
is wrong? Well, we will come back to that.
    Mr. Richardson. No, Senator Rudman has got a very good, 
strong report.
    Mr. Barton. Okay. It goes on to say that the labs have 
begun to monitor outgoing e-mails for classified materials, 
that you personally ordered that in April, but that one lab 
took the minimal action necessary. It began monitoring e-mails 
but did not monitor the files attached to the e-mails. What is 
your reaction to that?
    Does that indicate to you that they are taking seriously 
these concerns?
    Mr. Richardson. Well, no, no, no. Every lab has been 
strong, some stronger than others. There are some that should 
have been stronger. There were some technology problems related 
to cybersecurity. This is why I ordered this computer stand-
down.
    Mr. Barton. My high school junior daughter knows that if 
you are supposed to monitor an e-mail, you also have to monitor 
the file attached to it, Mr. Secretary. That doesn't take a 
rocket scientist at a weapons laboratory. I mean, that is kind 
of honoring the spirit of your direct request.
    Mr. Richardson. We are doing that.
    Mr. Barton. But not doing what is totally required.
    Mr. Richardson. What we are doing, we are monitoring e-
mail. There are such explosive changes in technology. This is 
why in cybersecurity you need constant testing. That is what is 
happening today in the stand-down.
    Mr. Barton. So can I depend upon you today directly to go 
back and send out another directive that in addition to 
monitoring the e-mails, they also monitor the files attached to 
the e-mails?
    Mr. Richardson. They are working on that.
    Mr. Barton. Do I need to give you a definition of what a 
file attachment is? I mean, how many levels down do we have to 
go before you begin to take this seriously?
    Mr. Richardson. You know, Congressman, I am--this is what I 
mean. I marvel at the sources of information that you have that 
I apparently don't have.
    Mr. Barton. Our source is sitting right next to you.
    Mr. Richardson. Well, you have--in the last second, 2 
minutes, you have come up with two claims that I am unaware of.
    Mr. Barton. I am not even the Secretary of Energy. I am 
just a lowly midranking Congressman trying to just bask in the 
reflected glory of your stewardship at the Department of 
Energy.
    I have got one final question for Senator Rudman.
    When Secretary Richardson ordered the computer shutdowns at 
the three laboratories back in April, the Department stated 
that the computers would not be allowed back on until each lab 
undertook certain security upgrades to prevent the downloading 
there, we have that word again, or transfer of classified files 
and to scan its unclassified systems and outgoing e-mails for 
classified data.
    Mr. Secretary--I mean, former Senator, what did your panel 
find with respect to these initiatives? Were the computers 
allowed back on despite the failure to achieve these upgrades? 
And if so, why so?
    Mr. Rudman. We started drafting this report in early May. 
We had a chance to observe much of what went on. We believe the 
stand-down was a good idea. We think something was achieved by 
it. We do not have the level of confidence of the Secretary or 
some of his people that we are quite where we want to be. As a 
matter of fact, in fairness, it is not just DOE. It is the 
entire government. Some of the firewalls that people think that 
have existed at DOE and other places don't exist.
    The PFIAB does not talk about its work publicly, but let me 
simply say parenthetically we do a great deal of work and have 
been doing it, obviously, in the area of the Intelligence 
Community and cybersecurity. So I think we probably know a 
little bit more about that than most folks out there.
    I have no high level of confidence, but I am not even sure 
the Secretary has a high level of confidence. I think they have 
done what current technology will give them, but there is a lot 
more to be done.
    Mr. Barton. Is there a protocol, now that your report is 
public, that prevents your staff that helped in the advisory 
board to compile this report from talking to the Secretary of 
Energy's designee on some of these issues? Is that allowed or 
not allowed?
    Mr. Rudman. It is allowed. The PFIAB is an independent 
group, but nonetheless part of the Executive Office of the 
President, bipartisan. It can work with any agency that has a 
component of intelligence or counterintelligence. So certainly 
we don't have a problem talking about it.
    Mr. Barton. The Secretary seems perplexed that sources of 
our information are not available to he and his staff, so I 
would encourage you to provide them what you have provided the 
committee.
    Mr. Rudman. Well, we are not the original source, but we 
will be happy to direct him to the best source in the 
government for that information.
    Mr. Barton. Mr. Chairman, in closing, if we take 
legislative action on this issue, and I hope we do, it will 
come before my subcommittee, and I pledge to the Secretary and 
to the Senator that we will work together to try to come up 
with something that everyone can support.
    I want to tell my good friend, the Secretary, that I want 
to be more proactive on this and think outside the box a lot 
more than I gather that you do based on your testimony today, 
but I will work with you on it.
    Thank you, Mr. Chairman.
    Mr. Upton. Thank you, Mr. Barton.
    Again, to my two friends, personal and certainly 
professional, we appreciate your fine work and your willingness 
to spend a number of hours with us this afternoon. We look 
forward to working with you in the days ahead. Thanks very 
much.
    [Whereupon, at 4 p.m., the committee was adjourned.]
    [Additional material submitted for the record follows:]
 Responses for the Record of Hon. Bill Richardson, Secretary of Energy
              questions from the house commerce committee
    Question 2. Do you believe that giving the labs more independence 
will change their culture or improve security? What do you recommend as 
the most effective step you can take to change the laboratory culture, 
from the lab director down through the ranks, so well described in the 
Rudman report concerning the significance of security and safety 
issues?
    Answer 2. Improving security at the labs depends on factors 
including Headquarters and laboratory management commitment; employee 
training; the recognition by each employee that security is their 
individual responsibility; and financial incentives for the 
laboratories to strive for the highest level of performance in 
safeguards and security. Each of these important areas is being 
addressed.
    Defense Programs has initiated measures that will institutionalize 
each of these factors. Field managers have been directed by Defense 
Programs Management to provide immediate, detailed information to 
headquarters for management assessment of all security incidents as 
well as their corrective actions. Defense Programs is currently 
tracking to closure all deficiencies so that sites will attain a 
satisfactory rating by the end of calendar year 1999. A laboratory 
stand-down was conducted in April 1999, and a 9-point INFOSEC Action 
Plan for all classified computer professionals and administrative users 
was instituted. A security Immersion Program for all federal and 
contractor field and headquarters personnel was conducted in order to 
provide training in Information Security policies and procedures and to 
insure that each individual understands that security is his/her 
responsibility. Finally, Defense Programs is working to assure a more 
consistent process for determining safeguards and security Performance 
Objectives, Criteria and Measurements (POCM's) for the laboratories in 
FY 2000. The new performance evaluation criteria will be based on 
safeguards and security results from oversight reviews. Award fees will 
be determined in conformity with the laboratories' performance and 
their accountability for individual protection programs.
    The revised POCMs will provide an incentive for the laboratories to 
achieve a satisfactory rating in their programs. Defense Programs 
management accountability and sustained attention to its safeguards and 
security programs will promote a cultural change and superior 
performance in these areas.
                   questions from congressman dingell
    Question 3. Who do you think should enforce environmental, health 
and safety requirements at the DOE weapons facilities? Under a quasi-
independent agency as proposed, how would these requirements be 
imposed?
    Answer 3. I believe the soundest approach to enforcement of 
environment, health and safety requirements in the DOE defense complex 
is one in which line management bears responsibility for safe and 
compliant operations, with a robust independent oversight and 
enforcement regime outside the operational chain of command. This 
ensures that all the Department's expertise can help assure safe and 
compliant operations. It is well to remember that the DOE defense 
complex must conduct its operations using potentially extremely 
hazardous materials in esoteric processes, and therefore assuring 
worker and public health and safety is an objective whose importance 
cannot be overstated.
    Under the recently-adopted National Nuclear Security Administration 
Act the Administrator is expressly charged by statute with 
responsibility for environment, safety and health regarding operation 
of the Department's defense complex. Other provisions of the 
legislation, in particular its unusual limitations on the Secretary's 
direct management and delegation authorities, likely will compel 
changes in the independent environment, safety and health enforcement 
regime within the Department with respect to the defense complex. 
Specifically, for example, the legislation would effectively terminate 
the emergency ``shutdown'' authority that since 1988 has been delegated 
to the Assistant Secretary for Environment, Safety and Health. We 
anticipate seeking clarifying legislation bearing on this question, and 
in any event will provide the Department's implementation plan in the 
report the statute requires the Secretary to submit by January 1, 2000.
    Question 4: The Rudman panel is very taken by the operations of the 
National Reconnaissance Office (NRO) which is responsible for the 
awarding and managing the contracts that provide the nation's 
surveillance satellites. The report indicated that DOE should be 
modeled after the NRO. Is this an appropriate agency to compare to the 
Department of Energy. Why or why not?
    Answer 4: The NRO's charter, which is a Department of Defense 
Directive rather than a statute, makes clear that the entire NRO is 
``under the direction and supervision of the Secretary of Defense,'' 
and is headed by a Director who manages the NRO ``in accordance with 
policy guidance and decisions of the Secretary of Defense.'' DoD Dir. 
5105.23, Sec. Sec. 1&2. The Secretary of Defense, in turn, may 
``exercise any of his powers'' of supervision of the NRO ``through, or 
with the aid of such persons in, or organizations of, the Department of 
Defense as he may designate.'' 10 U.S.C. 113(d). Thus the Secretary of 
Defense retains both direct supervisory authority over the NRO itself 
and the ability to delegate that authority to any person or entity 
within the entire Department of Defense.
    These Secretarial management authorities over the NRO were rejected 
in the legislation establishing the National Nuclear Security 
Administration. Instead that legislation enacted ``firewalls'' 
immunizing NNSA personnel from any outside supervision, including by 
the Secretary himself, and limited the Secretary's ability to delegate 
his sole supervisory authority--over just the head of the NNSA--only to 
the Deputy Secretary. These are major deficiencies of the legislation, 
which conflicted in this respect with the models of semi-autonomous 
agencies cited in the Rudman Report recommendations.
    Question 5: Does the NRO have any non-military scientific missions? 
Is it expected to go out and find unclassified work in the private 
sector to keep its contractors busy?
    Answer 5: While it is possible that the NRO has non-defense 
scientific missions, the Department is not aware of any such missions 
and there is no evidence of any such missions in the publicly available 
documents on the NRO.
    The Department of Defense Directive which created the NRO describes 
the NRO's ``Organization and Responsibility'' as follows: ``The 
Director [of the NRO] will be responsible for the consolidation of all 
Department of Defense satellite air vehicle overflight projects for 
intelligence, geodesy and mapping photography [deleted material] into a 
single program, defined as the [deleted material] National 
Reconnaissance Program . . .'' DoD Dir. 5105.23, Sec. 2 (March 27, 
1964). The NRO's mission statement as it appears on the NRO's official 
website reads as follows: ``The mission of the National Reconnaissance 
Office is to enable U.S. global information superiority, during peace 
through war [sic]. The NRO is responsible for the unique and innovative 
technology, large-scale systems engineering, development and 
acquisition, and operation of space reconnaissance systems and related 
intelligence activities needed to support global information 
superiority.''
    The Department similarly has no direct familiarity with the NRO's 
policies and procedures governing its contractors and their work.
    The Department will have to defer to the NRO regarding additional 
information on both of these matters.
    Question 6. The complicated organization chart in the Rudman report 
does not describe your recent changes, but is there more to be done/ 
For example, should the field offices be eliminated or significantly 
reduced?
    Answer: The ``complicated organization chart'' to which you refer 
was drawn to make the point that the lines of authority and 
accountability within the Department were unclear. While the chart was 
somewhat overdrawn, I agree with the point. That is why I chartered a 
Management Review of the roles and responsibilities and lines of 
authority and accountability at Headquarters and the field. In recent 
testimony before the Congress on these issues, I presented the attached 
chart showing how we had clarified the Department's program 
responsibilities.
    We are continuing to implement the changes to the Departmental 
structure that I proposed in April as a result of my Management Review. 
These changes will eliminate multiple reporting channels and improve 
lines of communication, direction and accountability.
    Regarding the field offices, I continue to believe they play an 
indispensable role. As you know, our laboratories and production sites 
are primarily government owned, contractor operated, facilities. These 
sites need a Federal presence nearby for contractor oversight, liaison 
with Headquarters and the continuing task of representing the Federal 
government to the surrounding communities, local political 
institutions, and regulators. We have reduced the Department's Federal 
field staff by an average of 25% since 1996 and we continue to look for 
more efficient ways to do our work in the field.

[GRAPHIC] [TIFF OMITTED] T0965.009

    Question 7. Would you oppose a requirement that all lab management 
contracts which have not been rebid in the last five years should be 
rebid at their next expiration? Why or why not?
    Answer 7. Consistent with the Competition in Contracting Act of 
1984 (CICA), DOE policy establishes competition as the norm for its 
contracts for the management and operation of its major sites and 
facilities, including its laboratory management contracts. DOE's 
competition policy also preserves the benefits of long term 
relationships by permitting contract terms for up to 10 years for these 
contracts. I support that policy and believe that there are significant 
benefits to competition. During this Administration, DOE has competed 
numerous site and facility contracts (both laboratory and non-
laboratory), e.g., Brookhaven National Laboratory, Idaho National 
Engineering and Environmental Laboratory, Bettis Atomic Power 
Laboratory, National Renewable Energy Laboratory, Hanford Site, Rocky 
Flats Environmental Technology Site, Savannah River Plant, the Oak 
Ridge environmental program, and Mound Site. Notwithstanding this 
impressive track record of competition, I would oppose a statutory 
requirement to compete laboratory management contracts which have not 
been competed in the last five years. Such a requirement would be 
contrary to established law and regulatory policy, could adversely 
affect the accomplishment of critical Departmental missions, and would 
ignore circumstances which would rationally support a noncompetitive 
action.
    Consistent with current law and regulations applicable to other 
Federal agencies, DOE's competition policy provides that contracts for 
the management and operation of DOE sites and facilities, including 
laboratories, will be competed, unless a noncompetitive procurement is 
justified in accordance with criteria contained in CICA. CICA 
recognizes the need for contractual latitude in addressing the needs of 
the United States Government by providing seven specific exceptions to 
the requirement to compete, e.g. only one responsible source; unusual 
and compelling urgency; industrial mobilization or essential 
engineering, development, or research capability provided by 
educational or nonprofit institutions, or Federally Funded Research and 
Development Centers (FFRDCs); and national security. Moreover, the 
Federal Acquisition Regulation (FAR), under Part 35.017, encourages 
long-term relationships between the Government and FFRDCs in order to 
provide the continuity that will attract high-quality personnel to the 
FFRDC, permit special long-term research or development needs to be 
met, and accomplish tasks that are integral to the mission and 
operation of the sponsoring agency. Flexibility under special 
circumstances is an important management tool in order for DOE to meet 
mission needs and retain excellent R&D laboratory contractors.
    The ability to engage in prudent decision-making provided by CICA 
and the recognition of the value of special long term relationships 
found in the FAR are critical to the successful conduct of DOE 
missions. DOE missions are broad and varied, critical to the national 
security of the United States, and the national laboratories are an 
important cornerstone in the accomplishment of these missions. However, 
this does not mean that DOE mechanically applies the exceptions allowed 
by CICA or the flexibility of the FAR. DOE's exercise of the discretion 
authorized by statute and regulation is, in fact, more rigorous than 
what is found in most, if not all, other Federal agencies. Any decision 
to extend rather than compete a management and operating contract 
requires an extensive analysis of the basis for non-competition, 
consensus of DOE's senior management, Secretarial authorization, and 
Congressional notification. Pursuant to the Energy and Water 
Appropriations Act of 1999, none of the funds appropriated by that Act 
may be used to award a management and operating contract unless such 
contract is awarded using competitive procedures or the Secretary of 
Energy grants a waiver to the requirement. Also under this Act, the 
Secretary must notify Congress of any waiver at least 60 days before 
contract award. Furthermore, DOE is the only agency that routinely 
reviews its FFRDC laboratory contracts for competition even though one 
CICA exception expressly covers FFRDCs. Over the last five years DOE 
competed, or is in the process of competing, six FFRDCs. No other 
agency has demonstrated such a track record.
              questions from the house commerce committee
    Question 8. The security function at DOE has always included the 
nuclear materials accountability responsibility. There are large 
amounts of nuclear materials stored at sites, such as Rocky Flats, that 
would not be part of the new agency as proposed by Senator Rudman and 
others. Do you believe that this is a workable and efficient 
arrangement.,
    Answer 8. The Department is committed to assure that nuclear 
material accountability responsibilities at DOE sites both within and 
outside the purview of the new administration will be coordinated in 
order to ensure proper accountability for these materials.
    The Department has convened a Task Force to develop a plan for 
implementation of the National Nuclear Security Administration. Details 
of the plan will be included in the report required by the National 
Defense Authorization Act for Fiscal Year 2000.
    Question 9. Under the Rudman proposal, who would be responsible for 
security at the other DOE weapons sites and its other facilities? Who 
would be responsible at Savannah River, Hanford, and Oak Ridge? Would 
there be a parallel structure for the non-weapons and weapons sites?
    Answer 9. The Department has convened a Task Force to develop an 
implementation plan for the National Nuclear Security Administration. 
Details of the plan will be included in the report required by the 
National Defense Authorization Act for Fiscal Year 2000.

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